Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

TORQUAY MARKET BILL [Lords]

As amended, considered; to be read the Third time.

RIVER WEAR BARRAGE BILL [Lords]

Read a Second lime and committed.

Oral Answers to Questions — DEFENCE

Manpower

Mr. Peter Morrison: asked the Secretary of State for Defence what is his estimate of the reduction of the numbers in Her Majesty's Forces as a result of cuts in defence expenditure.

The Secretary of State for Defence (Mr. Roy Mason): I must ask the hon. Member to await the statement which I plan to make on 3rd December.

Mr. Morrison: Is the right hon. Gentleman aware that any reduction in the number of Her Majesty's Forces at a time when the situation in Northern Ireland— indeed, in Great Britain—is deteriorating will not have the support of the vast majority of Her Majesty's subjects?

Mr. Mason: I would not want to mislead the hon. Gentleman and the House. I have spent many months on a major defence review which is aimed primarily at cutting back on defence expenditure with a view to diverting the savings to other productive capacity in the country and towards investment for exports. There are bound to be some cuts, but at this stage I cannot say what they will be.

Mr. Jasper More: Is the right hon. Gentleman aware that, quite apart from the question of Northern Ireland, it is considered by many people, in view of the situation in the world and particularly the situation in Western Europe, that it would be an act of criminal irresponsibility to reduce our defence expenditure at all?

Mr. Mason: If the hon. Gentleman attended defence debates in the previous Parliament he will know that I spelt out the threat. I am fully aware of the threat to our security. I have taken that into consideration during the course of my review.

Jaguar Aircraft (Sales)

Mr. Pattie: asked the Secretary of State for Defence what progress has been made with the sales of the Jaguar aircraft to the Indian Air Force: and if he will make a statement.

The Minister of State for Defence (Mr. William Rodgers): We are aware of the Indian interest in Jaguar, but it is not our practice to disclose details of prospective or actual sales of defence equipment.

Mr. Pattie: Does the Minister agree that, as the Indian Air Force is larger than the Royal Air Force, this contract would represent great benefit to the British aerospace industry, not to mention potential sales on the Indian subcontinent? Will he undertake to impress upon the Treasury that any refusal by that Department to grant the Indian Government the credit terms they are seeking would not be in Britain's best interests?

Mr. Rodgers: The hon. Gentleman is quite right to emphasise the importance of a sale of this kind. We have to take into account not only, as with all defence sales, political and security factors but also our own economic position and how far the Indian Government might be able to meet what we would regard as proper commercial credit terms.

Mr. Tebbit: Can the Minister say whether there are any political objections to this arms sale?

Mr. Rodgers: No. We have to look at this sale and all others in terms of the total package and what it represents. We do not underestimate the significance that this could have for the British aircraft industry.

Army Deserters

Mr. Woodall: asked the Secretary of State for Defence how many British Army deserters with service in Northern Ireland are domiciled in Sweden.

The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): Three soldiers, who are recorded as illegal absentees and who have served in Northern Ireland since 1969, are believed to be in Sweden.

Mr. Woodall: I thank my hon. Friend for that reply. Does he not agree that it is disgraceful that the British Broadcasting Corporation might encourage would-be deserters by its extraordinary highlighting of this subject?

Mr. Brown: Although it was certainly very much out of proportion for the BBC to devote a "Midweek" programme to such a very small topic, I doubt very much whether anyone thinking of desertion would have found the prospect of deserting to Sweden attractive as a result of the programme.

Rear-Admiral Morgan-Giles: Does the Under-Secretary agree with me that it is a little unedifying for the people of Britain to rush in with the measures which were announced by the Government yesterday, and which I fully support, because 16 or 18 civilians were killed in Birmingham when they do not do so when more than 250 British soldiers have been killed in Northern Ireland?

Mr. Brown: That is another question. If the hon. and gallant Gentleman cares to table a Question on that subject, he will receive an answer.

Civilian Contractors (Employment)

Mr. Hal Miller: asked the Secretary of State for Defence whether, in conjunction with the defence review, any estimate is being made of the likely effect of any cuts in employment in civilian firms supplying equipment and components.

Mr. Mason: I am not able to give any estimates in advance of my proposed statement, but I can assure hon. Members that we have kept the employment and industrial implications in mind throughout the defence review.

Mr. Miller: Does the right hon. Gentleman understand that very great uncertainty is being caused, particularly in my constituency, among many employees of firms supplying defence equipment and components and that in the case of one factory alone any significant reduction in aircraft would result in one-third of the work force being laid off? Is he to have any consultations with the work force, either directly or through the medium of his right hon. Friend the Secretary of State for Industry, who has pioneered this sort of consultation?

Mr. Mason: I recognise the hon. Gentleman's anxiety. I know that people in defence industries will be concerned. I hope that on 3rd December I will be able to make a statement outlining how much this will affect them but I hope that it will be manageable and that the unemployment prospects flowing from our review will not be so grim. I shall also be able to reveal that consultations wilt take place with both sides of industry as well as with our NATO allies.

Mr. Dalyell: Is it not sensible and attractive to my right hon. Friend that much of the oil-related expenditure done by the Navy should be transferred to the Department of Energy account?

Mr. Mason: That is not a question for me, I am sorry to say. My hon. Friend has struck one not for the Ministry of Defence but rather for the Department of Energy and for my right hon. Friend the Chancellor of the Exchequer.

Mr. Buck: The right hon. Gentleman has just said that his statement on 3rd December would enable him to say in what way these industries may be affected. Does that mean that after 3rd December there will still be room for alteration in view of any views expressed in the House about the balance of the defence review?

Mr. Mason: I shall not be able to give a clear indication of precisely how a firm in the shipbuilding industry or the aircraft industry will be affected, but it will be evident from the cuts that we will be making that some firms are bound to be adversely affected. The extent to which it will be manageable will depend on the time scale that we have in mind.

Multi-Rôle Combat Aircraft

Mr. Whitehead: asked the Secretary of State for Defence what is the latest development cost of the MRCA; and if he will make a statement.

Mr. Frank Allaun: asked the Secretary of State for Defence if he will now announce an estimate of the total cost for Great Britain of the multi-rôle combat aircraft project and the cost per aircraft; and whether, in the light of the announcement that the second phase of development is to take place, a final decision has been taken to proceed to construct 385 aircraft for his Department.

Mr. William Rodgers: I would refer my hon. Friends to the information on costs and numbers which I gave in my answer to the hon. Member for Carmarthen (Mr. Evans) on 22nd November.—[Vol. 881, c. 529–30.] Two prototype aircraft are now flying and the second stage of development which we entered on 1st October is proceeding satisfactorily.

Mr. Whitehead: Is my hon. Friend aware that his hon. Friends on this side are usually divided into three categories concerning the MRCA—those who wish to see it built whatever the cost, those who do not wish to see it built whatever the cost, and those who wish to see it built if it can be economically justified— and that I fall into the last category? Will my hon. Friend, as a contribution to the debate that we shall be having on the project on 3rd December and subsequently, also publish as well as that Written Answer the estimates that have been given to the appropriate committee of the Bundestag and the North Atlantic Assembly?

Mr. Rodgers: I always appreciate the wit and wisdom of my hon. Friend, and I will go as far as I can to help him. I have been looking for several months to get precise indications of this information which is supposed to have been given to other bodies, but so far I have found no hard information available other than that which we published in September and which I repeated in an answer to the hon. Member for Carmarthen last week.

Colonel Sir Harwood Harrison: Some of us have been to Germany and seen this prototype and the excellent work on the

start of rationalisation between the three countries. The RAF is extremely keen and anxious to have it in flight in this country. Whatever way the cost is put in this question, may I ask the Minister not to overlook the prime need of the RAF?

Mr. Rodgers: Of course we shall not overlook the needs of the RAF. We must, however, bear in mind the cost, and this is always in our minds. But we should remember that there are facts and there is speculation, and there has been a great deal more speculation about this aircraft than there have been facts.

Mr. Allaun: If the second stage of the Channel Tunnel is to proceed without any commitment to build it, can we have an assurance from my hon. Friend that there will be similarly no commitment to a final go-ahead with the MRCA, which would cost far more than the Channel Tunnel? Secondly, will not this colossal expenditure interfere with the defence review by my right hon. Friend the Secretary of State since it would pre-empt so much of the expenditure?

Mr. Rodgers: With regard to my hon. Friend's last question, we must wait and see. What priority should be accorded to the MRCA in the light of other economies which we are making in the defence review will certainly be a proper subject for debate in the House. But I do not think that comparison with the Channel Tunnel would be legitimate, even if it were proper for me to comment on it. The important thing is to consider the rôle of this aircraft, the need for it and the cost, and on that basis we shall decide in what circumstances and to what extent we shall go ahead.

Mr. Tebbit: The hon. Gentleman spoke of the shortage of facts and the excess of speculation. Remembering his preference for open government in these matters, which he has always expressed, can he help the House by publishing as quickly as possible even more of the estimates of the cost of the project?

Mr. Rodgers: The hon. Gentleman will recognise that the facts have been published here and that the speculation is elsewhere. It would be wrong for any Government at any time to try to answer speculation, whatever it is and wherever it is, and to take the pace which someone else has set. The Government have


already undertaken to publish more information if we can do so.

Mr. Robin F. Cook: May I remind my hon. Friend that the report of the Expenditure Committee in February urged him to evaluate the use of unmanned missiles as an alternative to the air defence rôle of the MRCA? In his observations on that report he promised to do so as part of the defence review. Now that he has given the go-ahead for the next phase of the MRCA before the defence review is completed, can we have an assurance that this evaluation was carried out, particularly in view of the successful use of missiles in the last Middle East war?

Mr. Rodgers: I appreciate the very shrewd and relevant point that my hon. Friend makes. He may take it for granted that we are always evaluating manned aircraft against the alternatives.

Mr. Younger: Will not the hon. Gentleman come clean about the facts of this aircraft? Does he agree that all the facts that we have suggest that this aircraft is outstandingly good value for money and considerably cheaper than any of its possible rivals?

Mr. Rodgers: I can go further and say that it reflects great credit on the designers, craftsmen and all the workers in this country who are involved on a very important project indeed.

Foreign Warships (Visits)

Mr. Gould: asked the Secretary of State for Defence what is the policy of Her Majesty's Government regarding visits to commercial ports in the United Kingdom by foreign warships carrying nuclear weapons.

The Under-Secretary of State for Defence for the Royal Navy (Mr. Frank Judd): Foreign warships may visit United Kingdom commercial ports only with the prior agreement of Her Majesty's Government. It is our policy not to comment on questions relating to the presence or otherwise of nuclear weapons on board these vessels.

Mr. Gould: Is my hon. Friend aware that five foreign warships visited the port of Southampton last month and that local residents were unable to get an assurance whether they were carrying nuclear

weapons or any other radioactive material, or information on the sort of controls which might be imposed if such materials were being carried? Will my hon. Friend therefore give an assurance that will set at rest the understandable fears of the people of Southampton?

Mr. Judd: Elaborate safety precautions and stringent procedures apply to the design and handling of all nuclear weapons, and the probability of an accident is very remote. My hon. Friend will, I know, not expect me to go into the details of these measures but I would say that in the highly unlikely event of an accident involving these weapons there is no danger of an atomic explosion.

Rear-Admiral Morgan-Giles: Does the hon. Gentleman realise that I visited the United States warships in Southampton at that time and that the ships' companies were ashore in Southampton apparently enjoying themselves very much indeed and the citizens of Southampton were on board the ships equally enjoying themselves?

Mr. Judd: Knowing the record of the hon. and gallant Gentleman, I have no doubt that he thoroughly enjoyed himself as well.

Diving Facilities (Oil-related Developments)

Mr. Dalyell: asked the Secretary of State for Defence if he will make a statement on the expansion of diving facilities at Rosyth and Alverstoke for oil-related development.

Mr. Judd: These facilities are being made available for courses for civilian divers while the Secretaries of State for Employment and for Energy consider the Training Services Agency's recommendation that a new diving centre should be established.

Mr. Dalyell: Why should these activities, in which both my hon. Friend's constituents and mine are engaged, be inhibited by the fact that they come under the wrong account heading so far as the Civil Service is concerned?

Mr. Judd: My hon. Friend will realise that that is not properly a question for me, but I can assure him that there is maximum co-operation between the Government Departments concerned.

Northern Ireland Fatalities

Mr. Stokes: asked the Secretary of State for Defence what plans his Department has under consideration for the provision of suitable public memorials for members of Her Majesty's Forces killed in Northern Ireland and other parts of the United Kingdom since the present emergency began.

Mr. Robert C. Brown: We have no such plans under consideration. Service men who are killed in Northern Ireland or elsewhere in the United Kingdom are commemorated in regimental rolls of honour and books of remembrance and, where their families wish it, by the erection of Service headstones.

Mr. Stokes: Is the hon. Gentleman aware that while his reply will go some way towards satisfying people it will not, I am sure, satisfy everyone? Is he further aware that respect for the dead, particularly for those who have laid down their lives for others, is a mark of civilised society and that those who died recently deserve as much honour as those who died in the wars of the past?

Mr. Brown: I agree entirely with the hon. Gentleman in the sentiments he expresses regarding the honouring of those who have died in the service of their country, wherever it may have been. But Service men have been engaged in a great number of operations since 1945 and it has not been the practice to erect public memorials commemorating those killed in those operations. If it were decided to erect a public memorial, this would be a matter for my right hon. Friend the Secretary of State for the Environment who is responsible for the Property Services' Agency of that Department.

Mr. Whitehead: Would my hon. Friend agree that there have been serious misunderstandings as a result of the decision of certain local authorities to refuse permission for the families of deceased soldiers to add their names to war memorials? Will my hon. Friend, in consultation with the Department of the Environment, ensure that local authorities are circularised so that there will be appropriate public memorials, not in addition to existing public memorials, to soldiers who have died in this way?

Mr. Brown: I think the matter of the erection of further public memorials must rest with the local authorities concerned. It is not a matter for my Department.

Mr. Kilfedder: Is the Under-Secretary aware that the great majority of people in Northern Ireland would wish to see a fitting memorial to the members of the security forces who have died in Northern Ireland fighting to restore law and order? Will he try to persuade local authorities to add the names of the honoured dead to local memorials?

Mr. Brown: If there were such a desire in Northern Ireland, I think that the best thing I could do would be to draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for Northern Ireland.

Suez Canal

Mr. Small: asked the Secretary of State for Defence what aspects of the clearance work of the Suez Canal have been undertaken by the Royal Navy; what is the extent of the progress to date; and if he will make a statement.

Mr. Scott-Hopkins: asked the Secretary of State for Defence when the clearing operations of the Suez Canal carried out by elements of the Royal Navy will be completed; and if he will make a statement.

Mr. Judd: On 13th May 1974 my right hon. Friend the Minister of State for Foreign and Commonwealth Affairs reported to the House that
Her Majesty's Government are providing the services of three mine-hunters, a support vessel and a part of the Fleet Clearance Diving Team to assist in the clearance of mines and other war debris from the Suez Canal."— [OFFICIAL REPORT, 13th May 1974; Vol. 873, c. 354.]
The Royal Navy task force completed operations on 1st November, having operated along the entire length of the main channel of the Suez Canal from Port Said to Suez. The force dealt with several thousand items of ordnance. The operation was co-ordinated by the Egyptians, and the United States and French navies also participated. This work was an excellent example of the way in which nations can work together in a common cause.
I was privileged to meet the force on its arrival in Portsmouth on 21st November and I am sure hon. Members on both sides of the House would wish to join with me in congratulating all members of the ships' companies on the seaman-like and supremely efficient way in which they carried out their most hazardous task.

Mr. Small: In thanking my hon. Friend for that reply may I say that, having listened to the practised palates of other Ministers making a meal of their answers, I believe that we are entitled to propose a toast to those who have operated in dangerous and hazardous conditions to make an international highway clear? Can my hon. Friend give an estimate of when the canal will be open to international shipping?

Mr. Judd: The Egyptian authorities have not yet announced a date for the reopening of the Suez Canal. There is still a good deal of work to be done on the canal, including dredging and the installation of navigational aids.

Mr. Scoft-Hopkins: In expressing my gratitude for the hon. Gentleman's answer and the manner in which he has congratulated all ranks on the hazardous work which they have done in the canal, may I ask him what negotiations are going on for the use of the canal and whether there will be a continuing commitment for elements of the Royal Navy to keep the channel clear?

Mr. Judd: We shall be happy and willing to look at any further requests in this respect.

Mr. Costain: While congratulating the Royal Navy on what they have done in the Suez Canal, may I ask the hon. Gentleman whether he realises that there are still mines in the English Channel, off Folkestone and Hythe, and whether these experts could be used to sweep there with the same apparatus?

Mr. Judd: It is never possible to give a 100 per cent. guarantee in an operation of this kind, but it can be said that a very high proportion of the ordnance resting on the bed of the canal has been disposed of or marked for disposal by the Egyptian authorities.

Mr. Buck: Leaving aside the geographical position of the constituency of my

hon. Friend the Member for Folkestone and Hythe (Mr. Costain), may I ask whether it is not a fact that this illustrates that, while we have only the third most powerful Navy in the world, we still have the best Navy in the world, because it has done a superb piece of work? Will the Under-Secretary confirm that HMS "Wilton", the first ship of this type to be constructed in fibre-glass, has been successfully used in an operation of this type and on this scale and that we still lead the world in mine-sweeping operations?

Mr. Judd: I am happy to agree with the hon. and learned Gentleman. I think everybody will agree that this operation has shown that we have an outstanding Navy which is second to none and that the ships and equipment used have proved highly effective.

Offshore Oil Ships and Rigs

Mr. Hooley: asked the Secretary of State for Defence what studies are being made by his Department concerning the use of naval dockyard facilities for the construction, maintenance or repair of ships or rigs needed for the exploitation of offshore oil.

Mr. Judd: As I have previously assured my hon. Friend, my Department is in close touch with the Departments of Energy and Industry on this matter. Liaison has been established to ensure that where any problems arise on production for the exploitation of offshore oil the feasibility of the dockyards undertaking the work is fully and speedily examined.
The part the dockyards might play in producing equipment for the offshore oil exploitation programme will also be kept under consideration in the light of decisions on the defence review.

Mr. Hooley: Does my hon. Friend appreciate that in the exploitation of North Sea oil there is a market for about £10,000 million worth of shipping and equipment? Does he agree that if the defence review, as I suspect, should involve the running down of dockyards for military purposes, it is of the utmost importance that they be converted to civil use in this respect?

Mr. Judd: Dockyards are generally fully laden with naval repair work,


although some spare capacity becomes available from time to time. It is indeed possible that some construction or repair work could be undertaken for offshore oil or gas projects. This would depend on the type and extent of the work and the availability of suitable berths and associated facilities and labour.

Mr. Younger: Will the hon. Gentleman bear in mind that when any naval dockyard undertakes work which would normally be done in civil yards it takes out of employment people who would be employed in the civil yards? In such circumstances, what steps do the Government envisage to compensate workers who would be put on the dole because of the Government's actions?

Mr. Judd: The Government at all times have high on their list of priorities the consequences on employment of any decisions made in the sphere of defence, and this is a matter which will receive constant attention.

Mr. William Hamilton: Will my hon. Friend give us an assurance that the promises made by the Secretary of State for Defence and the Prime Minister at the time of the election—that there would not be a reduction in naval personnel in the dockyards whatever might happen in North Sea oil requirements—will be kept?

Mr. Judd: My right hon. Friends the Secretary of State for Defence and the Prime Minister said during the General Election campaign that, whatever happened in the context of the defence review, there was no question of any dockyard closing.

Mr. Alan Clark: Is the hon. Gentleman aware that rumours are circulating in Devonport that naval construction there is likely to be suspended or cut down and that work on oil rigs is likely to be introduced, and that there is considerable disquiet at this prediction, since naval construction is a permanent feature of the industrial scene while the maintenance and construction of oil rigs is both transient and speculative?

Mr. Judd: The hon. Gentleman will appreciate that I am not responsible for rumours which may circulate in any dockyard community. I can assure him that there is a full programme of naval work

in Devonport Dockyard at the moment and that we see the future of Devonport Dockyard as being closely related to servicing the Navy and to the effectiveness of the Fleet.

Mr. Peter Walker: Is the hon. Gentleman aware that the hon. Member for Fife, Central (Mr. Hamilton) is not the only Member who understood the words of the Prime Minister and the Secretary of State for Defence concerning the dockyards to mean that naval work would continue to keep full employment in the dockyards? Keeping the dockyards open for a lower level of activity for the Navy than they engage in at the present time would be the unforgivable breaking of a promise.

Mr. Judd: I am happy to assure the right hon. Gentleman that the raison d'etre for the existence of the dockyards is the effective servicing of the Fleet. That will remain the primary rôle for all four dockyards. My right hon. Friends both said during the election campaign that if at any time spare capacity developed, steps would be taken to make sure that it was not allowed to be wasted but was used for other important national priorities. That remains the situation.

Defence Review

Mr. James Johnson: asked the Secretary of State for Defence what plans he has for a statement on the defence review, the publication of a White Paper, and consultations with the allies of Her Majesty's Government.

Mr. Cryer: asked the Secretary of State for Defence if he has completed the defence review; and if he will make a statement.

Mr. Tebbit: asked the Secretary of State for Defence when he now expects to make his promised statement on the proposed reductions in the United Kingdom's defences.

Mr. Mason: As I said earlier, the statement is planned for 3rd December. My right hon. Friend the Leader of the House has promised a one-day debate before Christmas; and a White Paper will be published early next year after consultations with our allies.

Mr. Johnson: Bearing in mind the long time that the House has been waiting for


the statement, may I ask that when my right hon. Friend makes it he will take care not to create the impression that the United Kingdom is becoming less secure in a world which is steadily becoming more insecure, both overseas and at home? My right hon. Friend and I observe the decisions of the party conferences, but will he take care that his cuts are made judiciously in view of the need for protecting civilian employment, since there will inevitably be some unemployment?

Mr. Mason: I heed the warning of my hon. Friend. The review has taken a long time but I do not apologise for that. It has been a long and rational appraisal and I hope that when I make my statement the security of the State will not appear to have diminished, although I hope to achieve noticeable defence expenditure cuts. Of course, I must inform my hon. Friend that since 49 per cent. of the work load of the aircraft industry and 31 per cent. of the work load of the shipbuilding industry depend upon defence contracts they cannot escape unscathed.

Mr. Tebbit: Will the right hon. Gentleman accept that we of the Opposition hope that he will be able to live up to his words on 3rd December and show us that in spite of cuts in expenditure the defence of the realm will not have been harmed? Will he bear in mind that at present we have more men on active service than at any time since the Korean War and it seems very odd time to be cutting defence expenditure?

Mr. Mason: It may also be wise to review our commitments and see where they may be cut so that the forces on active service may be better equipped to do the job.

Mr. Cryer: Will my right hon. Friend accept that my right hon. and hon. Friends and I look forward to the curtailment of defence expenditure so that we can emphasise Labour Party priorities of increased expenditure on housing, social services and education? Will he also assure the House that the recent disturbances in Northern Ireland and Birmingham will in no way affect his commitment to curtail defence expenditure?

Mr. Mason: I am sorry that my hon. Friend introduced that latter note, and it

is a most inopportune time to do so. On his former point, I hope he will press as strongly in making sure that the savings which I visualise are properly spent on the social services, housing, education and hospitals as he has pressed for the cuts in defence expenditure.

Mr. Fairgrieve: Might it not meet the point made by the hon. Member for Keighley (Mr. Cryer) if the Minister used the general formula that the percentage of our gross national product spent on defence should be similar to the percentage spent by Russia?

Mr. Mason: It is not fair to compare a continent with a small nation like this. [HON. MEMBERS: "Percentage of GNP."] I know that the hon. Member referred to a percentage, but I still do not think that is a fair comparison. We are committed to look at the statistics of our defence expenditure as a percentage of GNP compared with our Western European allies, especially our major European allies. Based on the NATO statistical information that is available, we spend more. Our intention in this review has been to spend less.

Mr. Molloy: Does my right hon. Friend agree that it does not follow that simply to spend many millions of pounds on defence enhances the safety of the realm? If there is ridiculous spending on defence, surely this can damage our economy and contribute to a very serious situation. We need a sensible, judicious assessment, upon which I hope my right hon. Friend's review will be based.

Mr. Mason: That is exactly what we have been doing. In our examination of the commitment we have been seeing whether the money was wisely spent, and we may be able to prove in due course that not all of it was.

Mr. Peter Walker: The Opposition feel that the recent events concerning the IRA require increased expenditure in certain spheres such as the Military Police and the RAF Regiment, and not lower expenditure. As for the overall commitments of the country, after five years of steady increase in defence expenditure by the Warsaw Pact countries we feel that this is no time for Britain to begin diminishing its contribution to NATO.

Mr. Mason: As past debates have shown, I am fully aware of the threat


from and of the expansion of the Soviet/ Warsaw Pact convention alliance, and I have borne that in mind. NATO is the linchpin of our security, and the front line in Germany is our front line as well. I hope that that will be maintained. I agree with the right hon. Gentleman that it is unfortunate that at a time when we have been considering defence expenditure cuts there may be a worry about our own internal security, but I have that in mind as well.

Mr. Stanley: asked the Secretary of State for Defence what representations he has received from our NATO allies about possible British defence cuts.

Mr. Lane: asked the Secretary of State for Defence what consultations he has had with other members of NATO in the course of the defence review.

Mr. Mason: Full and formal consultations with our NATO allies will commence at the time of the statement on the defence review which I mentioned earlier.

Mr. Stanley: Does not the right hon. Gentleman agree that it would be a bitter and shameful irony if this country, which was chiefly responsible for forging the North Atlantic Alliance, was 30 years later to be chiefly responsible for undermining its credibility?

Mr. Mason: I agree with the hon. Member. We have played a formidable part and a strong rôle throughout the whole of NATO's history and it would be a sad day if Her Majesty's Government—and a Labour Government—were responsible for unravelling that. I hope that, in consultation with our allies, I do not do that.

Mr. Frank Allaun: In the consultations will my right hon. Friend point out to our Western European NATO allies that we devote 5·75 per cent. of our GNP to arms whereas their average is only 3·9 per cent.? Will he also point out that they are in no position to dictate to us what we spend, because if we came down to their level we should save the little sum of £1,180 million a year?

Mr. Mason: My hon. Friend should not speak in terms of NATO allies dictating to one another. I have to meet our

NATO allies, and I have done so on a number of occasions. It is an alliance based on trust and friendship. We have to have a coherent whole to be able to match the threat of the Warsaw Pact countries and the Soviet Union.
My hon. Friend is right to quote the NATO statistics, and it was on that criterion that we embarked on the defence expenditure review. It is interesting to bear in mind that even if the Conservatives had succeeded at the February 1974 General Election they, too, would have had to be looking at the massive expenditure on defence.

Mr. Lane: Particularly at a time when the Government have disappointed many of our friends in Western Europe by their equivocation over the Common Market, will the right hon. Gentleman go a little further than he has gone this afternoon and assure us that the Government's review will not lead to any weakening in Britain's contribution during the critical period now facing NATO?

Mr. Mason: I am aware of the latter point and have reiterated it time and time again. I hope that the hon. Gentleman will not throw in the argument about the Common Market. The Western European nations have already welcomed our entry, because of the vigour we have put into argument, causing them to look again at their Commission and bureaucracy. The Common Market will be better for it.

Mr. Fernyhough: As each of our Western European allies is nearer to the presumed threat than we are, is it unreasonable that we should tell them "We can no longer afford to spend more than you do against this threat"?

Mr. Mason: My right hon. Friend is not being unfair. Some people in our country, being further removed from the frontier, will rightly say that. But NATO is an alliance. We want to keep is as a coherent whole and play our part in it, above all trying to help those who are nearest the frontier. It is true that NATO statistics show that as a proportion of GNP we spend more than the other countries, but they spend more in real spending, per capita spending. We are trying to bring the GNP spending back into line.

Bicester Married Quarters (Eviction Proceedings)

Mr. Hurd: asked the Secretary of State for Defence whether he will suspend proceedings for the eviction of Mrs. A. F. Gould from the quarters which she at present occupies at 33 Langton Avenue, Ambrosden, Bicester.

Mr. Robert C. Brown: No, Sir. The quarter occupied by Mrs. Gould is needed for the family of a serving officer. I have written to the hon. Member to explain the situation.

Mr. Hurd: I am grateful to the hon. Gentleman for the care he has taken over the matter. Does he accept, however, that I felt bound to carry it further because it is the case of a wife deserted by an Army major, a wife who was herself a member of the Armed Services and who is now a civilian employee of the hon. Gentleman's Department? Cannot he leave her and her children in peace for a few more months so that she can try to trace her husband in Australia and obtain some regular maintenance from him?

Mr. Brown: I have the greatest sympathy for Mrs. Gould, but my first priority must be serving soldiers and serving officers. I can give the hon. Gentleman the assurance that if the eviction takes place it will not be until after Christmas.

Soldiers (Notice of Marriage)

Mr. Dempsey: asked the Secretary of State for Defence if he will arrange special leave of absence for English soldiers intending to marry Scots girls, and who require to lodge personal notice of this intention at their respective local registration offices; and if he will make a statement.

Mr. Robert C. Brown: Special leave is not necessary for English soldiers stationed in England or Wales wishing to marry in Scotland. They may lodge notice of their intentions at the superintendent registrar's office nearest to their place of duty. Soldiers serving abroad may have more difficulty, but no such cases have been brought to the attention of my Department.

Mr. Dempsey: Is my hon. Friend aware that an English boy serving with the Army in Northern Ireland and anxious to marry his Scots fiancee can do so only by obtaining a special licence from the sheriff in Scotland, which together with the legal fees costs £20? It has been established that unless the soldier calls in person at the registrar's office for his place of residence in England he cannot marry a Scots girl without incurring those costs. Will my hon. Friend accept my advice and give such a soldier leave to make a personal call at his own office and give an intimation of his intention to marry a Scots lassie?

Mr. Brown: I think that my hon. Friend is on to something here. With regard to the sheriff's licence and the residential qualifications, I am sure that I should be extremely ill advised to become involved in the responsibilities of my right hon. Friend the Secretary of State for Scotland. If my hon. Friend has a specific case in mind I shall have a keen look at it, with a view to compassionate leave if need be.

Rear-Admiral Morgan-Giles: Does the Minister realise that the Question raises the whole matter of the domestic circumstances of soldiers serving in Northern Ireland? Does he realise that some infantry units are over there for the sixth time? Will he ensure that his right hon. Friend the Secretary of State does nothing in the defence review to reduce the numbers of infantry units, which would make the problem even worse?

Mr. Brown: I am sure that the hon. and gallant Gentleman will continue to take every opportunity to widen any Question to cover Northern Ireland, as he has done today. He will have heard what my right hon. Friend has already said this afternoon about that.

Oral Answers to Questions — ECONOMIC POLICY (PRIME MINISTER'S SPEECH)

Mr. Norman Lamont: asked the Prime Minister whether he will place in the Library a copy of his public speech on economic policy at the Lord Mayor's Banquet on the evening of 11th November.

Mr. Dalyell: asked the Prime Minister if he will put in the Library a copy of his public speech on 1lth November on economic policy at the Guildhall.

Mr. Skinner: asked the Prime Minister if he will place in the Library a copy of the public speech made at the Guildhall on 1lth November on economic policy.

Mr. Tebbit: asked the Prime Minister if he will place in the Library a copy of his public speech at the Guildhall on economic policy on 11th November.

Mr. Wyn Roberts: asked the Prime Minister if he will place in the Library a copy of his public speech on economic policy at the Guildhall, London, on 11th November.

The Prime Minister (Mr. Harold Wilson): I did so the following day, Sir.

Mr. Lamont: In view of the latest, alarming increase in the retail price index, may I ask whether the Prime Minister still stands by the extraordinarily confident prediction made by the Chancellor of the Exchequer in an election Press interview when he said that from next Easter there would be a steady and continuous fall in prices? When the Chancellor talked about light at the end of the tunnel, was he not confusing it with a train coming in the other direction?

The Prime Minister: I shall probably laugh at that later, when I have had time to consider it. What my right hon. Friend said, in what the hon. Gentleman described as predictions, both as regards Easter and the end of next year, was based on the assumptions associated with that statement, and what he said was true.

Mr. Dalyell: What lead are the Government giving in encouraging the Arabs to recycle their oil surpluses, not least for the benefit of the Third World?

The Prime Minister: My hon. Friend will know that there has been a great deal of international discussion on the matter, for example at the IMF and in meetings between my right hon. Friend the Chancellor and the Finance Ministers of other leading countries. I think it

is a fact that a considerable proportion of oil money has gone to Africa and other Third World countries, but on nothing like the scale required to avoid the problem of the overhanging petro-dollar surpluses. These matters were considered further last week in Paris, and my right hon. Friend is pursuing them. He will shortly be visiting some of the countries concerned.

Mr. Tebbit: Will not the Prime Minister address his mind to the point raised by my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont)? Does he not recollect that in his speech at Guildhall he did not refer to the election broadcast and the implied promises of his right hon. Friend the Chancellor, in terms either of the current 84 per cent. inflation or of the prospect for next year of inflation in single figures?

The Prime Minister: My right hon. Friend said that, on the assumptions that were then listed and published, it would be possible to get inflation down to near 10 per cent. by the end of next year. In my speech at Guildhall I referred to my own broadcast. The figure of 8·4 per cent. was a literal calculation, based—[Interruption.] My right hon. Friend, unlike the Leader of the Opposition, who tried his hand at it, can multiply a figure by four and get the right answer, and that is what happened. The same figure, rounded to 8½ per cent., appeared not only in the EEC publication but for several weeks in the Economist, which had it on exactly the same basis.

Mr. Skinner: While I have some confidence in my right hon. Friend's arithmetic, will he accept from me that it is almost bordering on the obscene to go to a Lord Mayor's Banquet, dine at a cost of more than £10 a head and then invite the workers to pull in their belts to save the country? Why does he not send them a letter next time?

The Prime Minister: Because I thought that it was more important to say what I had to say on such an occasion. I think that I admit my hon. Friend's point. I believe that my predecessor might do so. In the old days when I first went there the meal was extremely austere, consisting of a cold beef salad. I would have been happy to have had that on


the occasion to which my hon. Friend has referred, particularly as I had to speak.

Mr. Roberts: The Prime Minister referred to renegotiation of our terms of entry. Will he take this opportunity to clear up certain misapprehensions which arose as a result of answers given by the Secretary of State for Trade and President of the Board of Trade last week about our trade deficit with the EEC? According to the Observer, four-fifths of the deficit was due to five sectors in particular, two of which were dairy products and cereals, which we have been buying from the EEC in greater quantities because of their cheaper price as opposed to purchases from other parts of the world.

The Prime Minister: Of course I saw this matter in the Observer, but I have never been so impressed with the statistical qualifications of the Observer as to regard anything it says as derogating from the impeccable statistics produced by my right hon. Friend.

Mr. Jay: Is my right hon. Friend aware that the hon. Member for Conway (Mr. Roberts) is wrong as usual and that dairy products can now be bought outside the EEC much more cheaply than within it?

The Prime Minister: I should want notice of the latter part of my right hon. Friend's question. I am not at all surprised to hear what he has to say about the hon. Member for Conway (Mr. Roberts).

Mr. Heath: As the social contract is a contract between the Government and trade unions, will the Prime Minister now give consideration to the publication of a White Paper setting out in the Government's view the details of the contract, what progress has been made, the wage awards which have been made in the past nine months since it came into operation and how they comply with the social contract, and the present forecasts for the rate of inflation for the coming year?

The Prime Minister: The social contract was published when it was agreed, and it was not originally between the Government and the trade unions. It was published when the present Government were in opposition. The right hon. Gentleman will recall his own record at

the time. In fact, the social contract was endorsed in relation to the actions of the present Government by the TUC not nine months ago but at the end of June. It is on public record and it is in the Library. The other matters that the right hon. Gentleman raised are being almost incessantly debated in the House. They were debated for several days during the debate on the Gracious Speech. They were debated fully for three days during the debate on the Budget. The right hon. Gentleman has available to him all the information he needs.

Mr. Heath: The time has come when the country wants to be able to make an assessment of the overall picture, the consequences of the social contract, the extent to which it is being effective and the forecasts for the future. The right hon. Gentleman has said that all members of the Government are responsible for the contract, yet day by day Ministers are refusing to answer Questions about it. Last Thursday the Secretary of State for Employment refused to answer questions about the criteria and the consequences. I have just had correspondence from Scotland about this matter. In answer to a request for information, the Secretary of State for Industry has said that if my correspondent wished to have further details he should write to the General Secretary of the TUC at Congress House. What sort of government is this?

The Prime Minister: The country is in a position to form its own assessment— indeed, it made an assessment in October on the progress up to that time. The trouble that the country faces is that the right hon. Gentleman made his assessment before it even began, and he has had a continuing vested interest in increasing Britain's problems. [HON. MEMBERS: "Answer."] I shall take as long over my answer as the right hon. Gentleman took in putting his question.
The right hon. Gentleman is going round the country preaching gloom and desperately hoping that we shall not see an answer to the problems he has in mind. He will know that in a number of those cases anxiety has been frankly expressed by my right hon. Friends— [HON. MEMBERS: "Answer."] I am trying to answer the right hon. Gentleman's question. I shall do so when I can be heard.
The right hon. Gentleman has referred to some matters that he regards as being outside the social contract. Some of them have been the subject of clear comment by my right hon. Friends and by myself. He will realise that a number of them are due to problems that he left behind. For example, he must know that the nurses had been left behind, as had the teachers and the postmen. He set up an inquiry into the London weighting allowance. He should give full attention to all these matters. As for his interest in the increase in wage rates last month, four-fifths of the increase was due to his threshold payments.

Mr. Heath: Are we to have a White Paper setting out all these matters before Christmas?

The Prime Minister: I understand the right hon. Gentleman's concern about Christmas but I cannot promise that.

Oral Answers to Questions — STANDARDS OF CONDUCT IN PUB LIC LIFE (ROYAL COMMIS SION).

Mr. Brittan: asked the Prime Minister whether he will announce the names of the remaining members of the Royal Commission on Standards of Conduct in Public Life.

The Prime Minister: I hope to do so shortly, Sir.

Mr. Brittan: Does the right hon. Gentleman accept that for an inquiry of this nature, which arises largely from events in the North-East, it is particularly important that the members of the commission should be persons not only of unquestioned integrity but of political balance? Does he accept that as two of the three members so far announced are former Labour Ministers it is essential that the remaining members of the commission should redress the political balance?

The Prime Minister: The hon. Gentleman has no need for anxiety. I am sure he will agree that the exact wording of his question does not suggest that Lord Houghton and Miss Herbison are anything but persons of total integrity. He need have no anxiety. I have seen the letter he wrote to The Times. When I announced the first list of names I said

that it was not complete. I also said that I was in touch with the Leader of the Opposition in asking his views on who should be appointed. I can assure the hon. Gentleman that when the names are announced—I hope they will be announced in a day or two's time—there will not be a Government majority among those with parliamentary experience. It was never intended that there should be.

Mr. Whitehead: Will my right hon. Friend take this opportunity of repeating the assurance he gave in the last Parliament that however long the Royal Commission sits it will not inhibit Her Majesty's Government from introducing as soon as possible a register of interests of Members in this place and in another place?

The Prime Minister: I can give that assurance. As my hon. Friend will recall this was debated in the House and the Select Committee was appointed but the coming of the election prevented it reporting. We are awaiting a report from the Committee. Hon. Members will want the fullest possible register.

Mr. Aitken: Will the right hon. Gentleman ask the commission to investigate the double standards of public life, the rules of which apparently prohibit publication of Mr. Crossman's indiscreet memoirs but two years ago allowed publication of the Prime Minister's own memoirs?

The Prime Minister: This matter does not seem to arise from the Question but I shall answer the hon. Gentleman. Apart from getting his dates wrong, his facts are wrong. I explained in answer to a Written Question from my hon. Friend the Member for West Lothian (Mr. Dalyell) on 15th November the exact rules that have applied in successive Governments. My book was submitted to the Secretary of the Cabinet. The Prime Minister of the day took no part in it. It would be inappropirate for a Prime Minister in any such case to do so, and I am not doing so either. When I wrote my book I tried to ensure that I should be able to fulfil the rules that are normally applied by the Cabinet Office. There was no disagreement between the Cabinet Office and myself about what appeared in it. As I made clear last Friday to my hon. Friend, the continuance of public life in this country, and particularly of


Cabinet government, depends on discretion subsequently about what is said in full confidence between members of the Cabinet. That has been done, as I made clear to my hon. Friend in answer to the question at issue.

Mr. William Hamilton: Will my hon. Friend give an assurance that, whoever he appoints to the Royal Commission, there will be no former Lord Mayors of London?

The Prime Minister: I am not quite sure of my hon. Friend's point although I think I know what he has in mind. I do not believe that the holding of the office of Lord Mayor is either a qualification or a disqualification. When appointing Royal Commissions the Prime Minister of the day seeks to get as balanced a team of commissioners as possible and to ensure that they have the highest qualifications for the task.

Mr. Heath: As the Prime Minister will be aware, after the events referred to by my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) there was a complete review of the rules governing the conduct of Ministers. As far as Members of the House of Commons were concerned discussions took place through the usual channels, while in the case of civil servants the Estacode was reviewed and revised. But there still remained two major sectors of activity, local government and the nationalised industries, on which no action was taken.
Can local government and the nationalised industries really be left until the Royal Commission has reported before any action is taken about them? I suggest that, because of public anxiety, we cannot afford that amount of time. Is it not possible through the members of boards of nationalised industries to ensure that the regulations are tightened up in their case, and to take action in the local authorities through the local authority associations? The Royal Commission may not report for two years, and the matter is more urgent than that.

The Prime Minister: I agree with the main point put by the right hon. Gentleman. Of course the Royal Commission is free at any time to make a quick and

interim report if it feels that it should report urgently on something.
When the right hon. Gentleman himself was Prime Minister, he and I were in complete agreement on the local government aspect. I then called for a Royal Commission to be established when the inquiries were complete. He agreed, and set up the Redcliffe-Maud Committee ahead of the police inquiries being completed. Consultations are going on between my right hon. Friend and the local authority associations about the recommendations of the Redcliffe-Maud Committee. But the process has been held up a little because of the reorganisation of local government—quite inevitably.
The nationalised industries are the responsibility of the Ministers concerned. We are aware of the point stressed by the right hon. Gentleman, and which I, indeed, stressed when he was Prime Minister. I will certainly consider whether anything more needs to be done in that connection, just as I am sure that the boards of directors of public companies in the private sector are looking at the matter in exactly the way the right hon. Gentleman has indicated.

Mr. Beith: The Prime Minister does not seem to be seeking persons with extensive local government experience for membership of the Royal Commission and does not seem to wish it to go into specific instances but rather to make general observations, with the result that it is likely to prove no more valuable than a shelf on which to put an embarrassing and inconvenient problem.

The Prime Minister: I think that the hon. Gentleman must have misheard me earlier when I said I thought that people of that kind had neither more nor less qualifications to serve. I made this observation in reply to a question about Lord Mayors of London, not about local government generally. I am satisfied, from what has been done already and the further appointments to be made, taking into account also the thorough inquiry under the chairmanship of Lord Redcliffe-Maud, that local government will be adequately covered in this respect.

CHANNEL TUNNEL

The Secretary of State for the Environment (Mr. Anthony Crosland): With permission, Mr. Speaker, I will make a statement about the Channel Tunnel.
The House will recall that when on 11th November it debated a motion enabling the Channel Tunnel Bill to be rein-troduced my hon. Friend the Undersecretary undertook that the current estimated cost of the rail link from Cheriton to London would be published as soon as possible. The estimated cost in the 1973 White Paper was some £120 million in February 1973 prices.
The Government have now completed their examination of a revised cost estimate by British Railways. This amounts to £373 million at May 1974 prices, and this excludes the additional environmental works which have been canvassed in Surrey and Kent, the greater part of the cost of compensation under the 1973 Land Compensation Act, and the cost of enabling the link to carry freight, which was not previously envisaged.
It is out of the question that the Government should approve or finance an investment of this magnitude. We must find some less expensive means of enabling the through rail traffic, which forms so essential an aspect of the tunnel project, to gain access to London and the British rail network. British Railways are, therefore, urgently examining a range of lower-cost options intended to achieve the greatest possible volume of through traffic, including freight, while avoiding detriment to the existing Southern system.
In this situation it is clearly now impracticable for us to adhere to the previous timetable for decisions on the main tunnel project, which were due to be taken in the summer of next year. I have, therefore, today formally proposed to our partners in the project, the French Government and the two Channel Tunnel companies, that the timetable be put back to enable alternative lower-cost rail links to be thoroughly examined before we decide whether to build the tunnel or not. I have asked our partners for an early indication of their readiness to renegotiate the detailed arrangements on this basis.
If such an indication is forthcoming, the Government will immediately reintroduce the Channel Tunnel Bill, for this still has to be passed in order to keep open the option of proceeding with phase III. Indeed the sole purpose of reintroduction is to prevent the project from being abandoned by default. It implies no commitment to go beyond the present phase II.
The House should be aware, however, that the French Government have now re-emphasised to Her Majesty's Government their intention to complete phase II and the current economic studies with a view to signing Agreement 3 within the agreed time schedule. They expect the studies to confirm the economic and financial viability of the project. This may or may not be so. But in view of the large increase in the estimated cost of the rail link it is, as I have said, clearly essential in the interests of both Governments and the Channel Tunnel companies that the position be reassessed in depth. It is for this reason that I have now formally invited the French Government and the companies to reconsider with us the timetable leading up to the final decision on phase III.
When I have received and considered the further phase II studies, the report of the Cairncross Group and the advice from British Rail on an alternative rail strategy, I shall report them to the House. Meanwhile, as I have repeatedly told the House, the decision on whether to proceed with phase III and build the tunnel remains completely open, and the House will have the fullest opportunity for debate before this final decision is taken.

Mr. Channon: The House understands that, before final decisions are taken, there will be a full opportunity to take a decision in principle on whether to proceed with the project. Will the right hon. Gentleman give further details of the astonishing increase in costs which seems to have occurred? Can he publish a detailed breakdown of the reasons why these costs now appear to have trebled in such a short time? The House is entitled to know on what basis these estimated costs have been made.
What will be the scope of the re-examination of the project? Is the right hon. Gentleman saying, in effect, that he is


re-opening the possibility of other routes on the rail link? If so, that will cause widespread concern in Kent, Surrey and parts of London.
Does the right hon. Gentleman agree that if the project is to go ahead it is essential that it should be designed in a way which will be environmentally desirable, and that if he goes for cheaper solutions he must bear in mind the need to make them environmentally as acceptable as possible?
What effect will this decision have upon the investment of British Railways in, and the progress on, the advanced passenger train? Finally, how long will it be before the right hon. Gentleman can report to the House the detailed results of this discussion?

Mr. Crosland: The hon. Gentleman asked me first about why the estimated costs have escalated. There are three main reasons—inflation, environmental factors, and development and design. In fairness to British Railways, it is right to remember that this country has not built a new railway line since the turn of the century, when the Marylebone line was built.
The re-examination will consider other routes and, above all, the use, or partial use, of existing routes and infrastructure. In that way, I hope that the threat of blight to the environment will be greatly diminished. I agree that it is crucial, whatever option is finally chosen, that the route should be the most environmentally attractive and desirable of the options.
This decision will have no effect on the advanced passenger train. I hope that early next year we shall begin to get the preliminary views of British Railways, and by the spring, when the Cairncross and phase II studies are available, we should have a fairly firm idea of the options open to us.

Mr. Prescott: Is my right hon. Friend aware that I am glad he has now confirmed the caution and fears which many of us felt on 11th November and which led us to vote against the procedure then put forward? Is he further aware that it is plain that renegotiation of this agreement can take place beyond 1st January? May we now have a more detailed reassessment? Can he confirm that the

figure he has given for the British Rail link is the 1974 one? Most of the figures we have been operating on from Government sources were 1980 figures. Can he say what is the estimated cost in 1980? Is it not nearer to £500 million, and is it not time that we finished this folly?

Mr. Crosland: I am afraid that I cannot give an estimate of the cost of the alternative rail options in 1980 because we have not yet seen what the alternative rail options are. As to a decision about what my hon. Friend calls "this folly", surely the sensible time for the House to take a decision is not now, when it lacks most of the crucial facts and information, but in the spring, when it will have the advantage of the Cairncross study, the phase II studies and the report from British Railways on alternative rail strategies.

Mr. Stephen Ross: May I assure the Secretary of State that we welcome his statement? Is he aware that his words will be a great relief to the residents of Surrey and Kent who would have been affected by the proposed rail link? Will he now please listen to our requests for a short, sharp, public inquiry into the whole Channel Tunnel construction scheme, because this has been needed for many months and is now highly desirable?

Mr. Crosland: No, Sir. In my view this is not a subject which ought to be farmed out to a conventional public inquiry. This is a subject on which the final decision can be taken in only one place, and that is in Parliament.

Mr. Cohen: Would my right hon. Friend also consider the possible cost of the alternative to providing a Channel Tunnel, particularly for the benefit of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott)? Will he advise the House of the possible cost of such an alternative, particularly in relation to the development of the port installation area, packing areas and so on, which might arise if we decide to abandon the tunnel project?

Mr. Crosland: My hon. Friend has put his finger on what is the crux of the whole question and on which, with respect to many of my hon. Friends, there was a complete misunderstanding


in the debate of 11th November. What we are asked to decide, and what Parliament must eventually decide, is which is the cheaper method of carrying across the Channel the inevitable increase in traffic. Is it to be the Channel Tunnel, or is it to be the heavy alternative transport investment in ships, hovercrafts, port facilities and the rest, which would certainly be incurred by the country if we were not to have the tunnel?

Mr. Peyton: While I entirely endorse the last comments of the right hon. Gentleman, may I ask him whether this new estimate is entirely accepted by British Railways, and, if it is, how they reconcile these new figures with what was their own. admittedly provisional, estimate?

Mr. Crosland: British Railways accept the new estimate. Indeed, the new estimate is theirs, not the Government's. I have given three reasons why there is this marked discrepancy between this and the previous estimate. It is right to stress the fact that the main reason is probably because we have not built a single railway line since the turn of the century. We lack the detailed experience of the likely costs of building a new railway line.

Mr. Bagier: Will my right hon. Friend accept that those of us who agree with the Channel Tunnel project would welcome a full evaluation of all the costs involved? Will he give an assurance that there will be an examination of the comparative costs of alternative options? Will he further say whether, because of this delay, any penalty costs will be involved?

Mr. Crosland: The answer about penalty costs is "No". There will be a full evaluation of the costs involved. We shall have the phase II studies. It was precisely so that we would have an independent and full evaluation that, at the request of many hon. Members in many parts of the House, we set up the Cairn-cross inquiry. It will be for it to comment on the costs of the tunnel on the one hand and the costs of alternative transport on the other.

Mr. Wells: Can the right hon. Gentleman tell the House whether the French have already abandoned a similar highspeed rail link and are relying on a conventional rail link? If we step down from

the high-speed rail link, shall we not be doing the same as the French? Can he, in his inquiries, give the House the full comparative costs, as asked for by his hon. Friend the Member for Sunderland, South (Mr. Bagier), because it is imperative that the House, in reaching a proper judgment, is able to assess the escalation in Channel Tunnel costs—which are once-for-all costs—and contrast them with the endless escalation in costs for shipbuilding and hovercraft building?

Mr. Crosland: I understand that the French Government did not propose a completely new high-speeed rail link of the kind British Railways were proposing, which was announced in the 1973 White Paper. The answer to the second part of the hon. Gentleman's question is "Yes". The phase II studies and the Cairncross Report will be useless unless they enable the House to make a fair and exact comparison between the costs of the alternative methods of coping with cross-Channel traffic.

Mr. Crawford: Will the Minister accept that the news that certain things are to be examined before we decide whether or not to build the tunnel will be most welcome in Scotland? Does he also agree that what the people of Scotland want is either a scrapping of the tunnel or, if that does not happen, no financial burden being placed on the people of Scotland? Will he not further agree that the people of Scotland should not have to pay for something which they do not want?

Hon Members: Rubbish.

Mr. Crosland: I am delighted to hear that my statement will be welcome in Scotland. If I possibly can, I am delighted always to give pleasure to the Scots. It is not right to say that no one in Scotland supports the tunnel. Some of my Scottish hon. Friends are strong supporters of it. If this were to turn out to be the cheaper method of coping with cross-Channel traffic, the advantage of linking, for example, Glasgow with Milan is not something to be sneezed at.

Mr. Skinner: Is my right hon. Friend aware that the Government Chief Whip will be greatly relieved at my right hon. Friend's statement because he will now be able to push through further legislation for public ownership? Does he not agree that there has been a tactical


back-bench victory based on common sense?

Mr. Bagier: Nonsense.

Mr. Skinner: Does my right hon. Friend also realise that his statement has been slightly marred by the fact that it did not go all the way and kill the project once and for all?

Mr. Crosland: One of my main objects in life is to try to relieve my right hon. Friend the Government Chief Whip. That comes as a rather higher priority than satisfying my hon. Friend for the whole of the time. As for this being a tactical victory for a back-bench revolt, I am always extremely happy to give whatever credit I can to my hon. Friends on the back benches, but I have to point out it was not really a back-bench revolt. There was, rather, a major escalation in the cost of the rail link.

Mr. Stanley: Since thousands of houses from the White City to Folkestone were blighted by the publication of the line of the high-speed rail link, may I ask the right hon. Gentleman to confirm that his statement means that those whose homes are blighted may now regard the planning blight as having been lifted by a formal Government decision to abandon the construction of a high-speed rail link?

Mr. Crosland: My statement is a formal Government decision to abandon the construction of the high-speed rail link.

Mr. Snape: Does my right hon. Friend concede that the reasons advanced for the construction of the Channel Tunnel

and the associated rail link at the time when the treaty was agreed with the French Government are equally relevant today? Does he agree that if it makes economic sense to build a supersonic albatross in Bristol it makes even more sense to build the Channel Tunnel? Will he concede that some of the reasons advanced by hon. Members on both sides of the House for the dislocation that might be caused by the proposed rail link are even more relevant to motorways, although, surprisingly enough, hon. Members seem to be muted in their criticism of such developments?

Mr. Crosland: Detailed questions on Concorde should be addressed to my right hon. Friend the Secretary of State for Industry. My hon. Friend has made a valid statement about motorways. When we come to take a final decision, one matter to be taken into account is the consequence for road traffic of not having a Channel Tunnel. The arguments, both pro and con, are just as relevant now as they were when we debated the matter a year ago. What we must have now is these arguments and the detailed facts on which they are based brought up to date by the phase II studies and the Cairn-cross Report.

Several Hon. Members: Several Hon. Members rose——

Mr. Speaker: Order. We cannot debate this matter further today.

WELSH AFFAIRS

Ordered,
That the matter of Industry and Employment in Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. Pendry.]

Orders of the Day — SOCIAL SECURITY AMENDMENT BILL

Not amended (in the Standing Committee), considered.

Orders of the Day — Clause 1

CONTRIBUTIONS

3.51 p.m.

Mr. Kenneth Clarke: I beg to move Amendment No. 1, in page 2, line 4, leave out '2' and insert '1'.
This is the first of two amendments which we shall urge the Government to accept. Both amendments are an attempt to prevent the Government from distorting the system of graduated national insurance contributions upon which both sides of the House were agreed when they were introduced in 1973. The Government are being most unfair in the distribution of the burden which is involved in increased pensions, which we are glad to see that the Government intend to pay. We believe that, not doubt unintentionally, the Government are discriminating against most married women in employment in calling upon them to pay greatly increased contributions.
In inflationary times, everyone welcomes the raising of pensions and benefits so as to keep them in line with ever-increasing inflation. We are glad to support the Government in that, but we hope that the Government will do so by distributing the burden of paying for increased pensions and benefits on the basis of the value of benefit received by individual categories of contributors and on the ability of individual contributors to pay. That was the purpose of the 1973 structure which we are proud to have introduced.
That structure moved away from the restraints of the former flat-rate contribution system, under which the level of pension and benefit paid to various people dependent on the national insurance system was greatly inhibited because the national insurance contribution stamp had to be pegged at a rate which the lowest-paid worker could afford to pay. We moved away from that system by introducing graduated contributions based on

a percentage of earnings for each category of contributor.
We accept that there might have been some difficulty in introducing that system because it involves the better-off and the higher-paid having to pay more in April 1975. Unfortunately, the Government have made those difficulties very much worse. The Bill will raise before April 1975 the percentage rates which we fixed in our 1973 Act but will distort those rates between the different categories of contributor. The Bill distorts the rates approved by Parliament on the basis of what we believe to be the Government's prejudice against two particular categories.
First, there is a prejudice against the self-employed, and that is dealt with in Amendment No. 2. Secondly, there is a prejudice against the option exercised by the vast majority of married women in work, which is the subject matter of Amendment No. 1. Prejudice against the option rather than against the people leads the Government, unintentionally no doubt, positively to discriminate against married women in work in the way in which they are distributing the burden of payment under the Bill.
The Secretary of State, who is responsible, likes to see herself and often describes herself as the champion of women in all spheres of life, particularly in work. Despite the way in which she protests her intentions repeatedly when she is here, she does not understand the practicalities of the problem and often gives the impression of not understanding clearly the structure of the national insurance system for which she is responsible. By having a prejudice against the married women's option she has misled herself into the unfair treatment of three out of every four married women at work. Consistently for some years three out of four of all married women in employment have opted to pay the lower rate of national insurance contribution and in return have received only industrial injury benefits and National Health Service benefits.
The Government object to married women exercising that option. Their reason for doing so appears to be based on the belief that a move towards abolishing the option is a step towards producing equality for women in work. That view often appeals to have support from


feminist groups who support the Government in their intention to remove the right to make reduced contributions by women in work. The House should be clear what lies behind the belief of many people that the married women's option is an undesirable feature of the national insurance scheme.
Those who wish to abolish the option have in mind that women in employment should pay equal contributions for equal benefits alongside men in an improved national insurance system. The view of most feminist lobbies outside in urging the abolition of the option is that they want the Government to move towards raising contributions and benefits so that women are placed in a genuine position of parity with men, paying equal contributions for equal benefits. The Government in their White Paper said that that was the direction in which they intended to move some time in the future, but that is not what is proposed in the Bill. What is proposed bears no relation to that.
The question of benefits for married women being made equal to those available for men is not yet before the House. The Bill does nothing to increase the benefits available to married women who exercise the option. Those who exercise the option will receive only industrial injuries benefit and health service benefits. But although the Bill does nothing to give women equality in benefits, it takes a large step towards making equality of payments between men and women nearer to reality.
There is to be a great increase in what women pay, with no increase in what they will get out of the system. Although some hon. Members may believe that the Bill is a step towards equality for women, it is not. It is simply a way of getting more money out of a group of women who are believed to be more able to pay, who, significantly, are not a prominent group——

Mr. George Cunningham: Is it not true that, in addition to the benefits which the hon. Gentleman mentioned as payable to the opting-out married woman in the light of her contribution, she receives much more valuable benefit in the light of her husband's contribution? Is it not sensible

that she should be asked to contribute something to pay for that valuable benefit, along with the single woman and the single man?

4.0 p.m.

Mr. Clarke: All married women get the benefit of the £6 pension, which is in return for the husband's contribution. A married woman who does not go out to work gets that benefit and pays no contribution at all. In the Bill we are dealing with married women who go out to work. They pay an additional contribution, and it never has been related to the benefit which widows receive as a result of their husband's contributions. The contribution with which we are dealing in this discussion has always been regarded as a payment for industrial injury benefit and the National Health Service. That situation remains. Those benefits are not being increased nor are the benefits which a woman receives as a result of her husband's contributions. However, the present Bill dramatically increases the payments.
The women who are affected are those who choose to exercise the option of receiving reduced benefits. This is an important point because the Minister always appears reluctant to admit, in straightforward language, that married women who exercise the option at present do so for sound financial reasons. Most married women in employment would be foolish, looking at the situation on a financial basis, not to exercise the option to pay a reduced contribution and to choose instead to pay full contribution in their own right. I shall not repeat the arguments, but they are still not widely appreciated by some hon. Members who believe that married women in exercising their option are cutting themselves off from a benefit which they would otherwise receive.
A woman who does not pay the full contribution is entitled to the £6 retirement pension as a result of her husband's contributions. If she chooses not to rely on her husband's contributions and decides to pay the full national insurance contribution, when she retires she will receive the full £10 retirement pension which a single person would get but will not receive that in addition to her entitlement under her husband's contribution. The effect of a married woman choosing


to pay full national insurance contributions throughout her working life is that she raises the combined income of the couple to only £20 per week by way of retirement pension. In other words, her contribution obtains for her only an additional £4 per week above what she would have obtained had she chosen to exercise the option to pay the lower rate and relied on her husband's contribution in respect of retirement pension. Those women who are older than their husbands will receive benefit, but three out of four married women who exercise the option are probably wise to do so.

The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): Does the hon. Gentleman agree that, apart from pension, the married woman who chooses to pay her contributions will receive sickness and unemployment benefit? That factor should not be ignored.

Mr. Clarke: I agree with the Minister that such a woman is entitled to those things in her own right if she pays the contribution, but the hon. Gentleman, knowing the huge proportion of national insurance which pensions comprise, as opposed to other benefits, will not seek to deny that, on balance, a married woman who chooses to pay full contributions gets nothing like the bargain for her money that other contributors will obtain. Hence most married women who exercise the option at present would get a bad bargain if they opted to pay the full contribution.
The Government for the first time in legislation are seeking in the Bill to ensure that those women who opt to pay the lower contribution will get a bad bargain in return for their money. Whichever way a woman chooses to opt, on either basis, she will be paying considerably more by way of contribution than the market price or the actuarial price would justify her paying. Under the Bill a married woman will be bound to pay more than her fair share for whatever range of benefits she chooses to obtain.
In Committee the Minister of State revealed for the first time the part played in the market and in terms of the actuarial rate by the 2 per cent. figure in the Bill. The hon. Gentleman conceded that 0·6 per cent., the percentage on a given range of earnings under the Conservative legislation in 1973, represents a

fair market or actuarial price for the benefits received by a married woman under the legislation. That percentage is being more than trebled—in other words, to a figure of 2 per cent. of the given range of earnings. The Minister in Committee brazenly confessed that he is raising the cost of contributions for married women to more than three times the proper market price for the reduced range of benefits they choose to receive. The result has been that the Government are coolly seeking to raise married women's contributions to more than three times the market price, and in this way a substantial sum of money will be raised by the national insurance fund to subsidise other beneficiaries of the fund.
We have only to look at the sum of money which the Government are trying to raise under this legislation and at how the figure will be shared among the various contributors to see how much they are relying on getting—which represents far more than the market price— from married women to pay the Bill for increased pensions.
In this way the Government are seeking to raise £150 million. The Opposition cannot be accused of not being cost conscious because in Committee we directed all our arguments to the need to raise that £150 million. At present by the Government's proposals the extra contributions will be raised as to £59 million from employers; almost nothing extra above what was expected from employees; £23 million from the Exchequer; £21 million from the self-employed; and £47 million from married women exercising the option. Therefore, a comparatively small group of contributors will be providing almost a third of the total extra revenue which the Bill seeks to raise.
The Government, in seeking to justify their decision to increase married women's contributions to more than three times the figure that is actuarially justified, argue that married women will still be paying less than they would otherwise have paid. The Government argue that married women will find that their contributions will be reduced in April next year and will not notice that the reduced figure represents more than a fair price for the benefits which they are purchasing. The way in which the Government seek to advance these arguments appears


to be somewhat topsy-turvy, but this is the argument that is often heavily relied upon by the Labour Minister who is dealing with these matters.
The Government argue that they have done two things which will come into effect from 1st April next. They argue, first, that they have ended the old system, the Boyd-Carpenter system, of graduated contributions for earnings-related benefits. The old Boyd-Carpenter bricks are going and all contributors will find that graduated contributions are no longer being paid and that the Boyd-Carpenter benefits are being abolished.
The Conservatives' second pension proposals would have come into effect next April. All employed persons would have been paying additional contributions to a funded occupational pension. This would have represented a great step forward for employed married women because for the first time all employed married women would have had the protection of an occupational pension comprising definite rights in terms of their own retirement and an investment based on their own contributions, and employers' contributions, too. However, the present Government have suspended that scheme and obviously intend to put nothing in its place for two or three years until the new so-called Castle scheme begins to take effect—if the Government can get that scheme into credible shape. It is an act of incredible political folly to do away with the Boyd-Carpenter scheme and not to go ahead with the second pension scheme so that for three years there will be a gap in the system.
The Government are taking advantage of that folly. Given the fact that they find themselves in a situation next year where employed persons will not be paying any additional national insurance contributions, they are claiming that it is a virtue that so many will pay less for their pension entitlement. As that applies to married women, the Government take advantage of it by coolly putting up the market price for national insurance benefits to married women opting to pay the lower rate, still taking credit for the fact that they will pay less than they were paying before April last year.
We feel that, because of the Government's own unfortunate approach to pensions policy, they have produced a posi-

tion in which many people will pay slightly less because there is no second pension plan ready for April next year. But it is quite wrong to rely on that to disguise a swingeing increase in the contribution expected from married women and to rely on them to subsidise other contributors to the extent proposed in the Bill. Given that the Government take advantage of the fact that married women would otherwise pay less to put on them increasing contributions which cannot be justified in any other way, they refuse to do the same for any other category of employed person.
One other consequence of the Government's decision about April next year is that the great majority of employees will find their national insurance contributions actually going down next year. This would have been the consequence of our legislation if we had contemplated it without any second scheme as well. But the Government have taken over this feature of our scheme and appear to take some pride in pointing out that most employed persons will pay less next year. Even at the top end of the earnings scale, employees will find that their rate of national insurance contribution is going down slightly. In looking for ways to relieve the problems of the self-employed and of married women, the Government refuse to minimise the reduction in national insurance contributions from which employed persons as a whole will find themselves benefiting in April next year.
In Committee, the Government rejected an amendment moved by the Opposition which would have raised the employee's contribution by one quarter of 1 per cent. and would still have left most employees in the position where they had a reduction in national insurance contributions from April next year onwards. That amendment, which would have made that trivial difference to most employees, would have raised an additional £83 million for the National Insurance Fund. The amendment, which the Government would not contemplate, would have raised nearly twice the amount necessary to allow working married women to continue to pay the fair market rate, which is the rate that we proposed in our 1973 legislation.
The Government's proposal, in our opinion, throws an interesting light on the social contract. The Government are happy to increase the burden on married


women and the self-employed, yet they reject any suggestion that the burden on employees of paying for the new pension benefits should be raised. A term of the social contract is supposed to be that increases in pensions and benefits are provided for those relying on the National Insurance Scheme. Another Bill shows us that the Government are not likely to keep up with the rate of inflation generated by selfish wage claims. But the social contract is supposed to increase the level of pensions and benefits.
It is interesting to see from the Bill that although the trade unions insist on the raising of benefits as one of the terms of the social contract, trade unionists are not to pay any increased contribution themselves for this supposed feature of their social contract. Instead, when it comes to paying for it, other sections of the community, such as married women, are expected to foot the bill out of all proportion to their actuarial liability to do so.
In seeing that married women are singled out to raise money in this way at a time when the Government refuse to contemplate minor increases in the employee's rate, in order not to offend the trade union movement, we see confirmation of our fears about the Government's approach to national insurance.
We are saddened by the fact that still, apparently, employed women have a comparatively weak position in the trade union movement. If the Government are not prepared to amend the Bill—and so far they have refused obdurately to contemplate any amendment of it—we shall have to regard it and the distribution of burdens under it as a cynical demonstration of the weak position of employed women inside the trade union and Labour movements. No other group of contributors are singled out to pay more than three times the actuarial or market rate for the benefits that they will receive under the national insurance system. To choose to do that at present is not a step towards equality of treatment for women in employment. It is a highly discriminatory step away from it. They are being singled out to pay more than their fair burden for other contributors.
The Opposition seek to redress what we believe to be a legitimate grievance. We trust that, even at this late stage, the

Government will for this category of employees accept our amendment and reduce the burden on married women who go out to work to an acceptable, proper market level.

4.15 p.m.

Mr. George Cunningham: I am sure that the hon. Member for Rushcliffe (Mr. Clarke) does not believe that his case is fair to the arguments existing on the other side and those which were advanced in Committee. The nub of the argument on this amendment—and it will be the same on the next one—is this: if there has existed for some time an arrangement which seems to give to some group of people benefits in excess of their contributions, should that arrangement be regarded as sacrosanct, never to be corrected for all time?
I am prepared to argue that the contribution paid by the opting-out married woman in the past has been too low in relation to the benefits she has received. It is for that reason that I welcome the Government's proposal greatly to increase the contribution demanded of her.
Let me also ask the hon. Member for Rushcliffe whether he does not think that he fell into what I called "the Zachariah fallacy" in saying that a small increase in the contributions of employed men would raise as much money as a large increase in the contributions of opting out married women. I call it "the Zachariah fallacy" because it can be argued that, because there are very few people whose names begin with the letter "Z", they can be relieved of all taxation and of all contributions to any scheme by making an insignificant addition to the contributions of all those whose names begin with all the other letters.
Fairness requires us to operate on a different basis. We have to try to allocate obligations in accordance with a rational and respectable actuarial calculation. To be fair, the hon. Member for Rushcliffe used the word "actuarial" many times. The question, surely, is whether it is fair to ask of the opting-out married woman a contribution which reflects not only those benefits which she receives in respect of her own contributions—because I presume that that would call for about 0·6 per cent.—but also one which reflects the £6 pension which she


will get like every other wife when she comes to retirement age, if her husband is retired.
There is an argument to be mounted on both sides. I ask hon. Gentlemen opposite to recognise that there is a respectable argument on that point on this side. Whether it is the argument that the Government choose to put forward in defence of this arrangement is their concern, not mine. My reason for voting against the amendment is based on the thought that the £6 pension that an opting-out married women, with other married women, receives is far and away the most valuable benefit that she gets.
I invite the House to consider that of all the payments out of the National Insurance Fund, retirement pensions, in the latest year for which I have figures, represented 71 per cent. of the outgoings. That relates to all retirement pensioners, not just the £6 women pensioners. Of that amount I should think that the £6 women's pension must constitute about a third. The cost of that pension is far in excess of all the other benefits added together to which the opting-out married woman is entitled.
It is said that the opting-out married woman has no extra entitlement to that benefit compared with any other woman. Nor has the single woman. The single woman in her contribution has to pay towards those £6 pensions and the single man has to pay a higher contribution than would otherwise be necessary to pay for the £6 pension of all the married women. Is it not fair that the opting-out married woman should be invited to pay a contribution to it as well? I suggest that an honest, well-intentioned, fair person could very well conclude that it was right that she should pay a contribution in addition to the 0·6 per cent. to represent the most valuable of the benefits that she is to receive, because they are not fully paid for by her husband's contributions.
If we accept that in principle, the question is, what contribution it is appropriate for her to pay? Given that the retirement pension costs so much compared with all the other benefits added together, prima facie it does not seem that there is reason to believe that a contribution of 2 per cent. is excessive.
It is for that reason that I shall oppose the amendment. I suggest that, in the light of that argument, it is not fair to say that we are trying to clobber the opting-out married woman and to make her subsidise other contributors. I think that if a reasonable actuarial calculation were made we would find that the opting-out married woman was still being subsidised considerably by other contributors—notably the male and single woman employed.

Mrs. Elaine Kellett-Bowman: I have never head such a topsyturvy so-called actuarial argument as that advanced by the hon. Member for Islington, South and Finsbury (Mr. Cunningham).
I rise to support very strongly the amendment to reduce the contribution paid by married women who choose to opt out of paying full contributions. The amendment seeks to reduce those contributions from 2 per cent. to 1 per cent., which is still above what they are paying now but which would be a welcome reduction.
The Minister is well aware of the value which we on this side of the House attach to the married woman's option. It is a value that is plainly shared by three out of four married women who take the positive step of going to the trouble of opting out. And well they may, because, if they do not opt out, they get a very bad bargain indeed—quite contrary to what the hon. Gentleman said—except in the very small number of cases, of whom I am one, where the woman is considerably older—at least five years—than her husband. It would be a very good bargain for me, because I am seven years older than my husband. Therefore, I would get a pension at 60 instead of at 72. However, few women are in that position. For others it is a very bad bargain indeed.
Except where that is the case, a married woman, unless she opts out, would be paying the same contribution as a single woman for much smaller benefits. For example, she gets a reduced rate of unemployment and sickness benefit, except in the rare case where she is the breadwinner. But, most important of all, she could pay a lifetime of full contributions


and get only an extra £4 pension over and above the £6 to which she would be entitled as a wife who had paid no contributions. It seems ludicrous to offer the argument advanced by the hon. Gentleman that she should be levied for this pension when a woman who does not go out to work gets it entirely on her husband's contributions. It is small wonder that women are very keen on opting out.
There is a further very important reason why women opt out. The Minister of State, in Committee on 23rd January 1973, admitted: "Her"—that is, a married woman's—
income is not just a bit of pleasant extra money coming into the house. It is an essential part of the household budget."—[OFFICIAL REPORT, Standing Committee E, 23rd January 1973: c. 190.]
How much more so is that the case to-day, particularly in my constituency where the tragedy of unemployment has hit us again, as it always does under Labour. It did in 1968 when we were penalised as against the development areas, and it is doing so again because we are being penalised vis-à-vis the development areas. This makes it all the more vital that a married women should be able to keep as much as possible of her wage packet for essential family purposes.
It is monstrous that the Bill should seek to increase by more than treble the amount that an opted-out married woman will have to pay, from 0·6 per cent. to 2 per cent. It is a gigantic rise for no extra benefit. She and the self-employed—two very worthy categories, but disliked by hon. Gentlemen opposite—are the tragic victims of the Bill. In total, opted-out married women will have to pay a gigantic £47 million extra under the Bill. That is a wholly unjustified burden on women who are already finding inflation a nightmare burden for their families.
Women, are of course, both practical and realistic. They know that benefits must be paid for. What they bitterly resent is paying for the benefits that they do not get or get at a lower rate.
The Minister mentioned in a previous debate the Government's intention of removing the half-test which deprives many women of a pension even when they have contributed at the full rate for most of their lives. I would welcome

this abolition, but there is no mention of it in the Bill.
Women are also very fair-minded. I think that my hon. Friend the Member for Rushcliffe (Mr. Clarke) made that very plain. They would resent the added burden less if they thought that everybody else was being asked to shoulder a similar additional burden, but that is not the case. Out of the additional £150 million that the Chanceller seeks to raise, nearly one-third, a wholly disproportionate burden, will come from these unfortunate opted-out married women.
It is for this reason that my hon. Friends have put down the amendment seeking to halve the burden, and I strongly support them in their attempts to get a fair deal for women.
But the argument goes even further than that. The Minister has repeatedly said that it is the Government's intention to abolish the married woman's option altogether. I fear that this increase is part of a gradual process aimed at making the option less attractive so that when the Government finally withdraw the option the uproar will be less. But I warn them that there will be an uproar, not least in my native Lancashire, with which the Minister is not unacquainted, because women will not lightly give up an option they find of great value. I strongly support the amendment.

4.30 p.m.

Mr. R. A. McCrindle: I wonder whether I am the only hon. Member who, listening to yet another social security debate, and particularly to the to-ing and fro-ing of the party argument, is inclined to ask whether the sometimes sterile debate that we have has not gone far enough on social security. The recent history of social security shows one Act succeeding another as one Government succeed another. One asks whether there could not be some mutual ground on which the parties could come closer together for the benefit of those whom they represent. It is in that spirit that I wish to speak on this important amendment.
Hon. Members on both sides who are interested in this vital matter affecting millions of the people we represent might do worse in this period between the suspension of the previous Conservative Act and the enactment of this Government's


proposals than see whether the present Government could not legislate in a way which a future Government of a different complexion would be unlikely to reverse. We are addressing ourselves here to an area of social security which for a considerable period has been the subject of acrimony between succeeding Governments, acrimony which has done little good to the people we represent, least of all to these women.
Having tried to take that neutral and non-partisan attitude, I must say how greatly I regret the Government's folly in casting almost completely aside the provisions of the 1973 Social Security Act. I have said before in the House, and I repeat it now, that there seems to me to be no reason why that Act could not, and should not, have been taken as the basis of social security provision, albeit with sustantial amendments. I greatly regret the Government's action in throwing the whole Act out, thus ensuring that we could not return to its basic purpose for at least a considerable time.
Now we are turning our spotlight again on married women, a subject which was explored at great length in Committee on the 1973 Act. This time, however, an enormous additional burden is being put on them. The implied lack of interest on the other side of the House and, frankly, the not much greater interest on this side in a matter of such vital concern to roughly half the people we represent is unfortunate.
The Government, and perhaps we too, are running the risk of drawing a veil over the fundamental points. Talk of percentages obscures the fact that the women are being subjected, justifiably according to the hon. Member for Islington, South and Finsbury (Mr. Cunningham), to a sizeable redistribution of the requirements for achieving these benefits.
The present Government's clear intention is to phase out the married woman's option. They hinted at this during the passage of the 1973 Act, and, to their credit, they have made this aim clear. Yet the average married woman at work would almost certainly say that she found the option a good bargain and wanted it to continue. I am not saying that that should be the only basis on which to approach the matter, but it is a starting

point. The women have had a good bargain, they like the freedom to opt for the lower contributions and they clearly want the system to continue. So, no matter what the justification for change, it is no bad thing to concede, as I am sure the Minister would, that the Government are flying in the face of the preference of the majority of married women.
There is not much attraction to a woman to opt in, and the Bill does not change that situation materially. I am particularly concerned about possibly increasing the discouragement to women contemplating going out to work if the option is withdrawn. Many will moralise that far too many married women already go out to work and that their place is truly in the home looking after children. Leaving aside the question of whether I agree or disagree with that argument, the House must accept that if male unemployment increases it would be unfortunate to discourage women who might become temporary breadwinners.
The hon. Member for Islington, South and Finsbury asked a fair question— whether we were suggesting that the system should never be changed, that because married women have benefited in this regard, they should continue doing so indefinitely. I am not taking that line. I am saying that when we are moving into a period of massive social security changes, when, because of the Government's premises, the treatment of married women cannot be overlooked, when at some time the position of women's entitlement and their expectation of equality must be brought up to date, to fiddle with the situation in this irritating way is to bring unpopularity on the Government's head for no good reason.
Raising the married woman's contribution is just a very good way of raising money, and I am sorry to say that I believe that this has been at the heart of the Government's thinking. But they cannot deny that the disproportionate requirement for women which their proposals entail would lead to discrimination against women at the very time when in other spheres of policy the Government are anxious to show how opposed they are to that discrimination.
Listening to the Home Secretary, one can be forgiven for thinking that the Government are the champions of women and


their rights, whereas listening to one of the, ironically, only two women in the Cabinet—the Secretary of State for Social Services—one can be forgiven for feeling that she is almost entirely paying lipservice to the cause of women. If this were truly a step towards equal benefits, one could begin to understand the reason for the Government's proposal. But I repeat that it is no more that an interim step on the way to the full-scale proposals which the Government are to introduce in 1975. Quite apart, therefore, from any objections that I may have to the distortion created and to the discrimination introduced, I believe that the Government would have been well advised to defer this change until they were able to bring forward their proposals.
I conclude by repeating that if there is a way in the future for the Government to avoid confrontation with the Opposition—and, to be fair, vice versa— there should be a full exploration of that possibility before we move into the fullscale Bill to be presented next year. In the meantime, and because that Bill, hopefully with all-party agreement, is the basis for the radical change which the Government have in mind, it is a major shame that they should be bringing forward a proposal which does no more than tinker with the question of women's contributions and women's benefits.
For that reason and, as I hope I have proved, in the Government's interests as well as in the interests of the mass of married women who will be affected by this proposal, I hope that even at this late stage I can persuade the Minister to accept the amendment.

Sir William Elliott(Newcastle-upon-Tyne, North): I support the amendment for one basic reason. I believe that at this period in our industrial history we must give the maximum encouragement to women workers, particularly in areas such as mine in the north east of England, where modes of production have changed rapidly and substantially in recent years.
It is not so very long ago that two officials of the English Industrial Estates Corporation told me that they would seriously consider, if necessary—they thought that it might be necessary—proposals for the staggering of the working hours of particular factories on trading estates in

order to encourage an increase in the availability of female labour.
The north east of England has known problems of unemployment and continues to know them. They are problems which worry us constantly. But we are short of female labour at present. Therefore, I hope very much that the Minister will take full note of the fact that I support the amendment because I wish to encourage women to go out to work and not to discourage them. I can see nothing other than discouragement in the proposal as it stands. I therefore add my full support to the amendment.

4.45 p.m.

Mr. Alec Jones: I should like to reply to the points that have been made, but before doing that I want to make some general remarks.
As many hon. Members know, we have rehearsed this ground on so many occasions that my words will be known to Opposition Members as well as their words were known to me. We can almost start from the premise that very little new or unexpected has been said. I shall be taking up some of the points in the order in which they were raised and I shall deal with some others later.
The hon. Member for Rushcliffe (Mr. Clarke) again talked of increased contributions, as did several of his hon. Friends. It is an exaggeration, to put it mildly, to talk of the proposals in the Bill increasing the contributions for opted-out married women. I invite the hon. Gentleman to come to my constituency and to talk to an opted-out married woman whose earnings are £46 a week—if he can find one with earnings of £46. I take the figure of £46 as the middle of the range. I invite him to say to that lady, "Next April your national insurance contributions will be reduced by £1·18 per week." I suggest to the hon. Gentleman that with that sort of reduction in mind he would have some difficulty in persuading such a constituent of mine, or many of his constituents, that this was a greatly increased contribution. We can develop the argument later. Does the hon. Gentleman wish to challenge the figure?

Mr. Clarke: I was wondering whether the Minister would like to explain to that married lady what she would have been paying had the Bill not been amended


and what she will be paying under the present Government's proposals to amend the 1973 legislation. The Minister knows that the proposal in the Bill will more than treble her contribution. As I suggested, he is hiding behind the fact that the married woman will not have to pay for the Boyd-Carpenter benefits, because they have been abolished, and the fact that there will not be a second pension scheme because the Government chose to scrap it.

Mr. Jones: I shall come to the Boyd-Carpenter scheme and other matters later. I was merely giving the present facts. There will be these reductions.
The hon. Member for Newcastle-upon-Tyne, North (Sir W. Elliott) supported the amendment. I understand the situation in areas in which unemployment is high. No one who has represented Rhondda in the House could be completely unaware of the problems associated with unemployment and of the need to encourage married women to go out to work. The reductions I have described are in themselves an element of encouragement in that respect.
I am sorry to note that the hon. Member for Lancaster (Mrs. Kellett-Bowman) has left the Chamber.

Mr. A. J. Beith: The hon. Lady has left her notes.

Mr. Jones: I have practically got her notes in front of me. Although the hon. Lady is not present, I realise that she may be absent for a perfectly good reason. As hon. Members know, things get complicated in this House.
The hon. Lady quoted what I have said on several occasions. She quoted a speech that I made in Committee on a previous Bill, when I argued that the earnings of married women who go out to work were an essential part of the family budget. The hon. Lady suggested that I ought, therefore, to be supporting the married woman's option. But if she had quoted that previous speech in full, she would have found that I was at that time arguing the case for absolutely equal treatment, indicating that as the income for a married woman is part of the family budget, so would or so should unemployment or sickness benefit be an equally important part of that budget, and that

that lady should draw those benefits when necessary. The case I was making on that occasion was for absolute equality of treatment.

Mr. McCrindle: Would the Minister care to comment on the point that I made, that of all the times to seek to withdraw or even to water down the married woman's option, a time when we may be moving towards a situation in which women could conceivably become principal breadwinners is just about the last time to contemplate doing that?

Mr. Jones: That argument is based on the mistaken belief that each individual contributor to the National Insurance Fund pays for his or her own benefits and that there is no cross-fertilisation, as it were. It is on that one premise that that argument is advanced.
There was some talk by a number of hon. Members, including the hon. Member for Rushcliffe, the hon. Member for Brentwood and Ongar (Mr. McCrindle) and the hon. Member for Lancaster about the Government's position regarding the future of the married woman's option. No one has a shadow of a doubt where we stand on that matter. We made our position quite clear when we were in Opposition. We said that as a general principle we thought it desirable in the interests of married women that they should contribute to and receive from the National Insurance Fund in exactly the same way as male contributors.
Our White Paper "Better Pensions" spelt out in some detail our attitude towards the married woman's option. On Second Reading I did the same thing. I repeated and emphasised the points that we made in the White Paper. We are certainly not attempting to do anything without letting the country, the married women and married women's organisations know exactly where we stand. The discussions now taking place go towards that end.
The burden of the Opposition's case is that the increase in the class 1 contribution rate for opted-out married women and widows from 0·6 per cent. to 2 per cent. is substantial. We have not sought to conceal that from the House. It is self-evident. My son could have worked that out when he was at primary school.
But to say that the increase is substantial misses the point. Further, it is a


mathematical nicety to say that 2 per cent. is just over three times 06 per cent. This is not the reality. The questions which married women will ask are— "What are those of us married women who have chosen to opt out paying now? What shall we be paying in April 1975?" The true answer is that almost all opted-out married women will pay less than they are paying now and that opted-out married women at the higher end of the earnings scale will pay very much less than they are paying now.
I gave to the House earlier the figures for the £46-a-week opted-out married woman. These figures show how those with the highest weekly earnings gain the most. At £46 a week, the opted-out married women will pay in April £1·18 less than she pays now. At £62 a week she will pay £1·72 less. At £69 a week she will pay £1·57 less. No one can use the words "excessive burdens" to describe such reductions.
The division between the two sides of the House is not about increases. It is not how much more married women will pay in April 1975. The question is, how much less will they pay, and how can we justify the extent of the various reductions?
The hon. Gentleman said today, as he has said previously, that it was not right for us to take the graduated contributions into account. He reminded the House of the importance of the Boyd-Carpenter scheme. He said that we should not take the graduated contributions into account because they were intended to provide a graduated benefit.
One of the major purposes of the Boyd-Carpenter scheme was not only the graduated pension which would accrue; it was to provide an income to pay the current flat-rate benefits. This has been a tendency which has grown over the years and has been the accepted practice of successive Governments. At present, half the contributory income comes from that source.
Our national insurance scheme in itself is a redistributive scheme, with all better-off employees contributing on an earningsrelated basis towards current flat-rate benefits. That is why we do not think it right that from April 1975 the opted-out married woman should be singled out to pay no contribution to the general

cost of benefits as such. It is easy to use the words "unfair burdens" and to suggest, as the hon. Member for Brentford and Ongar did, that married women have enjoyed the right to opt out, and that because they have exercised it this is an absolute reason for continuing the option at this level.
If a similar option were to be offered to single men, three out of four would take it. If it were to be offered to single women, they likewise would take it. If we were to put the whole of our system of national insurance forward on an option basis, large numbers might well opt out. The fact that large numbers opt out now is no justification for saying that we should accept the proposal in the amendment.
My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said that single men and women, by contributing without the right to opt out, make valuable contributions towards benefits which they never receive and, in some cases, benefits which they hope they never will receive. These are the reasons why we do not believe it reasonable to allow a reduction of the size proposed by the amendment.
In these debates the word "actuarial" is much used. There is nothing actuarial about the amount of earnings-related contributions people pay for flat-rate benefits in any pay-as-you-go scheme. The rates of contribution are based on the total cost of the benefits of the scheme.
The distribution between particular groups is a matter of political judgment and sometimes of political differences. It certainly is not a matter of strict actuarial calculations. Higher earners are paying more than is actuarially needed for their benefits. Lower earners pay less.
We ask why should not married women make some contribution to the general costs? By their amendment the Opposition say that that contribution should be 1 per cent. Our opinion is that it should be 2 per cent. It is a matter of judgment.

Mr. Kenneth Clarke: Will the Undersecretary confirm that his approach is totally abandoning actuarial considerations and, as he says, is in no way an


actuarial attempt to assess different contributions from different categories but is in fact a political judgment of what any category will bear? Will the hon. Gentleman confirm that clearly and then mention it to his hon. Friend the Minister of State before he rises to speak on the next amendment, because, as the hon. Gentleman says, we each know our words on this subject rather well by now? Is the hon. Gentleman aware that the Government's sole case on the self-employed seems to be based on an actuarial argument that the amount that they pay should be much more in order to get up to an actuarial contribution to the national insurance fund?

5.0 p.m.

Mr. Jones: The importance was when I used absolute actuarial basis, but the hon. Gentleman should not become tied up with the exactitude of all this. It was the general principle we were talking about.
Many figures have been mentioned today. We have heard about what has been described as an extra burden of £47 million which a wicked Socialist Government are said to be taking out of the pockets of married women who have opted out. To describe it in that way is unrealistic and in many cases misleading——

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose——

Mr. Jones: I shall explain the position, if the hon. Lady will contain herself. We are talking of substantial reductions on a weekly basis which I spelt out before the hon. Lady came into the Chamber, but I did not object to the global sum being used. The figure of £47 million is the difference between the annual product of a 06 per cent. rate and of a 2 per cent. rate. But that is not the issue. We are proposing a reduction in the total contribution of opted-out women of more than £40 million. When one talks of a burden of £47 million, it is difficult to marry that with the reality of reducing the total contribution for opted-out women of £40 million——

Mrs. Kellett-Bowman: Would the hon. Gentleman make it clear that the reduction applies equally to some benefit which is being taken away?

Mr. Jones: The difficulty here is to rehearse the same argument which has already been gone over and to explain to the hon. Lady the contribution to the Boyd-Carpenter scheme, a large proportion of which has always been used to finance flat-rate benefits. That has been a principle accepted by Governments of both political parties and it has extended throughout the years. The hon. Lady may shake her head until her heart is content but that is the position.
The amendment would seek to reduce the rate for opted-out women from 2 per cent., as proposed in the Bill, to 1 per cent. It is interesting that the Opposition are not suggesting that we revert to the 0·6 per cent. figure of the 1973 Act. The Opposition, by choosing the 1 per cent. figure, seem to accept that a reduction of 0·6 per cent. would be too great a reduction in the contribution of the opted-out married woman. We come back to the question, to what level should the reduction be made——

Mr. Kenneth Clarke: The hon. Gentleman has referred again to our amendment and I cannot resist putting a point to him. As he has just noticed that our amendment refers to a figure of 1 per cent., would he accept that this makes it a little less necessary for him to do what he has just done, in charming and pedantic fashion, namely to lecture us about the cross-subsidy element in the scheme, because our amendment contains some cross-subsidy element? If he wants to justify his cross-subsidy at 2 per cent., can he say which other category of contributors is cross-subsidising other categories to the extent of paying over 300 per cent. more than the actual actuarial contribution? How far from the true actuarial contribution is the hon. Gentleman prepared to go?

Mr. Jones: We are entitled on this side of the House to say that, in our view, to create a fair degree of subsidisation, using the figure of 2 per cent. is fairer than using the figure which the hon. Gentleman suggests.
We are saying that we believe that the reduction proposed by the Opposition is indefensible at a time when many other contributors are being called upon to pay more. No doubt in the second amendment, which we shall soon be discussing, hon. Members of the Opposition


will call for massive reductions for other contributors and will argue that we have put up contributions too high. Both sides of the House agree that there must be a reduction. We believe that our reductions are reasonable and fair to all concerned, and I ask the House to oppose the amendment.

Mrs. Lynda Chalker: I continue my support of the sensible amendment which we put forward in Committee, and again for consideration today, for a reduction in the married woman's payment from 2 per cent. as in the Bill, to 1 per cent.
I do so because I have always believed that if people pay for something they should get value for money. If married women decide that they wish to opt out, thus agreeing to benefit mainly through their husband's contribution to the National Insurance Scheme, it is right that they should be allowed to retain some extra income, no matter how small it is.
We can hardly take this amendment in isolation, although I shall attempt to do so, because we have throughout Second Reading and in Standing Committee needed to consider the raising of income to support better benefits. We are all in favour of better benefits, but the question is how the method of raising the money should be spread out. I wonder repeatedly what it is in the Government's mind which makes them so anti-married women who opt out and anti the self-employed.
We must accept that when the Government need to raise money, each category of contributor has to do its bit. That is why we are prepared to say that the reduction should be from 2 per cent. to 1 per cent. and not from 2 per cent. to 0·6 per cent., thereby getting married women who opt out to make a further contribution to raising the additional revenue to give better benefits to those people who need them. But I do not know why we have to burden these women to an extent that has been cloaked in mystery by the Minister.
He refers repeatedly to putting the burden on all better-off employees. It seems to me that the better-off employees are not those women we are talking about. I know that the Minister will say that we are to give them great reductions as from next April. That is how it will seem for a few months. For how many months

will they continue to be in that advantageous position of not paying as much as they might have paid previously? Undoubtedly, doing away with the Boyd-Carpenter system, means a reduction in contributions if only for the time being, and not making a second pension contribution either, will mean that opted-out married women will be in a nice lulled situation, but for how long we do not know.
It is not very much for members of the Government or Members of the House to have to pay an additional £28 a year, but for the woman who decides to opt out it is. The woman who is trying to contribute every penny possible to her home and household sees that the situation is different, and the difference will be noticed even in these times of inflation. These women provide an essential part of the family budget, and they provide things which otherwise so many families would have to do without.
All our social security legislation is bedevilled in debate by the word "actuarial", as well as by theories on various arguments for and against such proposals. But all this does not make any difference to the ordinary woman who has opted out, no matter how much eloquence or lack of eloquence there may be in our debates. She is looking at her income not only for the week ahead but for much longer, although some women cannot budget for longer than a week. In deciding whether to go back to work a woman is looking at her income over a much longer period of time.
I cannot understand why the Government are not prepared to consider the whole range of reasonable amendments which were put forward in Standing Committee, and only two of which are now being put forward, which could ease the situation more than somewhat for those groups who are having this burden unfairly placed upon them.
The hon. Gentleman says that it will not be unfair on 5th April next year. He is quite right. For a few weeks or months it may not be unfair. But I am concerned not with what is obvious today but with what is implied for the future. So long as three-quarters of all women employees wish to continue opting out, they should have the right, because it is an essential freedom for them, unless by paying more


money they contribute to get improved benefits.
We have not heard from the Government at any stage of this Bill, or in any White Paper, that this more-than-tripling of their payment will give them an improved benefit. I have made some attempt since the Committee stage to look into the statistics behind the contributions, to see who benefits, and by how much, for each of the national insurance and national health payment going to the various groups. Without the assistance of the Civil Service it is almost impossible to unravel what percentage is given to which group for which benefit, but no doubt in time I shall get to the end of that investigation.
What I am convinced of, having looked at the groups who make demands on our social services and at their contributions, is that the married women who opt out are not making any greater demand than before which would require them to carry at one and the same time so steep an increase as in this situation.

Mr. George Cunningham: Is the hon. Lady taking into account the £6 pension?

Mrs. Chalker: I am taking into account the £6 pension. I have said that it is not necessarily the situation which we shall be in as from 5th April next year, but the situation over a much longer period, with which I am concerned.
In Committee the Under-Secretary said, in answer to questions from my hon. Friends, that there was nothing devious in this Bill about the married women's option, that the Government were not thinking of tinkering about with it. "Tinkering" was the word that the hon. Gentleman used. I am sure that he was absolutely sincere, but I am convinced that this is only the thin end of the wedge for the many women who wish to go back to work, but who would opt out of the full contribution in order to put money by for various reasons. When we need specialists, they may consider that for tax reasons it is not in their own interests to go back to work. But if they wish nevertheless to go back to work so that they can contribute something to society, I feel that no disincentives should be put in their way.
The Under-Secretary told us in Committee and again today that he is having

and will continue to have discussions with the TUC, the CBI, the Department of Employment Advisory Commission on Women's Employment, and the Women's National Commission. Perhaps he started those discussions too late. Whatever advice he is likely to get, I cannot believe that it will not be influenced by the sort of representations which have been made to myself and to many of my colleagues about the very steep increase in the opted-out married women's contribution.
I never thought that we were in Parliament to do away with personal freedoms, options and those personal decisions which every person should have a right to make. Therefore, I hope that we shall not eventually move towards doing away with the married women's option. Nevertheless, I suspect that in a situation of decreased payments from next April for a while, the Minister is seeking to arrive at a situation in which nobody notices that we shall do away with another freedom when married women wish to go back to work in order to contribute to society and to the income of their families.
I shall support the amendment without out hesitation.

5.15 p.m.

Mr. Kenneth Clarke: I begin answering what the Minister said by taking up the theme of my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), who said that in social security debates of this kind we ought to avoid sterile political argument when essentially we are discussing important technical problems connected with a scheme within the terms of which we should find some broad scope of agreement between the parties.
It is particularly appropriate to take up that theme because, as my hon. Friend the Member for Newcastle-upon-Tyne, North (Sir W. Elliott) reminded us, we are dealing with an extremely important aspect of life and work at the moment, which is the rôle of married women in contributing to household budgets, which in many hard-pressed families is an important feature in managing to keep the family's head above water. In proposing these amendments we are moved more by sadness than by anger. In producing the Bill the Government have departed— for reasons which we still believe are


partly, perhaps unconsciously, based on prejudice—from an agreed structure which I thought we had in Part I of the 1973 Act.
We are dealing with Part I of the Act about which there was agreement between the parties that the principle of graduated contributions based on earnings ought to be introduced to pay for flat-rate benefits. Both sides were agreed that that basis would have to be pursued until some kind of second pension arrangement could come into operation. Parliament legislated in 1973 on a basis which sought to apportion a proper share of the burden of the national insurance scheme on a dynamised basis between the various contributors. We always accepted that had we still been in government in 1975 we would have had some protests from amongst the higher paid who would have felt that they were being called upon to pay more by way of contribution whereas the lower paid would have had their contributions reduced. We would have explained to the public why these changes were being made and that it was accepted on all sides that this basis of graduated contributions ought to be pursued.
Unfortunately, the Government, in bringing forward this Bill, have not chosen to follow the pattern of the 1973 Act and have not chosen to spread the increased burdens which they feel are necessary across the whole range of contributors. They have singled out certain contributors for special treatment over and above that which we proposed in 1973. It is that which leads us to argue on behalf of this category of married women and to say that we cannot believe that the Government intended to open up this controversy. We do not feel that they can have realised when they brought forward this legislation in July of this year how much they were singling out married women in employment for specially severe treatment. We hope that we can get back to a lack of party political acrimony and to general agreement on a structure which will not single out those women for this sort of treatment but will deal with them on a fairer basis.

Mrs. Kellett-Bowman: Married women are already in considerable difficulty with their pension in that they are the only section that has to fulfil three require-

ments before getting the pension. Unlike employed or single people they must fulfil the half-test as well as the other two contributory tests and this is a very difficult provision.

Mr. Clarke: I entirely agree with my hon. Friend, Mr. Thomas. Of course, the Government can say that they intend to abolish the half test, which we would all very much welcome. When they do so—and I accept that they are committed to it in the White Paper on pensions proposals which will presumably reach legislative form some time early in the new year—we shall happily support them. We all know the difficulties that the half test has always caused and we look forward to a Government being able to produce credible legislative proposals to remove this burden from married women. If the Government remove the half test and begin moving women towards equality of benefits and taking away such anomalies as the half test, they can with justice introduce equality in contributions. But all that married women in employment can look forward to are the good intentions of the Government to improve their position on benefits. They have no actual changes to rely upon. There are hard legislative provisions to increase their burden of national insurance contributions.

Mr. McCrindle: Before we get down too much to the fine detail of the situation, will my hon. Friend go back to what he said at the beginning of his speech when he referred to my suggestion about trying to move very gradually away from sterile debate, whether we are talking in generalities or in detail? Was he agreeing with my suggestion that there is a strong argument for both sides getting together on this vital matter to find the lowest common denominator of agreement—in other words, apart from the detailed points about married women, to see whether discussion between both sides of the House would be advantageous? Does he agree that in our general approach as a Parliament to social security provisions there is a strong argument for such discussions?

Mr. Clarke: I entirely accept that, Mr. Thomas, and it is something we have been trying to move towards on the White Paper proposals.

The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): The hon. Member for Brentwood and Ongar (Mr. McCrindle) should be aware that I have already responded to comments and demands of that kind on a public platform last week on which both I and the right hon. and learned Member for Surrey East (Sir G. Howe) were sitting.

Mr. Clarke: We were all cheered to see that the Minister made some response, Mr. Thomas——

Mr. Deputy Speaker (Mr. George Thomas): Order. That is the third time that the hon. Member has done me the favour of calling me Mr. Thomas. I correct him only in case he calls Mr. Speaker "Mr. Lloyd."

Mr. Clarke: Before I make any more mistakes, Mr. Deputy Speaker, may I apologise for not addressing you in your proper style and dignity which I am sure we are all glad to see you wearing.
We were delighted to hear the Minister of State's response to the Opposition's approach at the British Institute of Management conference, which I was not able to attend, last week. We hope that he will respond in good faith to approaches of this kind which have been suggested by my hon. Friend the Member for Brentwood and Ongar. We have made a specific proposal and we await a specific response from the Government about the idea of a Select Committee to consider the important social security and pension scheme changes which are to be made in the coming year.
It would seem that the process of a Select Committee as opposed to Standing Committee, hearing witnesses and considering their evidence on an all-party basis, is wholly preferable on a subject of this nature where everyone would like to see all-party agreement. On both sides of the House we criticise ourselves to some extent because our political battles of the last ten years have produced so much uncertainty and caused such damage to the proper development of pensions policy.
It is reassuring to see that we can still reach some understanding, some common denominator, on the 1973 Act. There seems to be no difficulty in our agreeing on the basis of graduated contributions.
My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) and I welcome the idea of abolishing the half-test and of moving towards equal benefits for women. Why, oh why, therefore, if there is and should be this underlying basis of agreement, do we find ourselves in this quite unnecessary squabble? It arises because the Government have decided that in the interval before we can start improving benefits for women, and taking other steps towards equality of treatment, married women are a suitable means of raising substantial extra money to subsidise other contributors to carry them through the difficult two or three years before the Castle scheme gets anywhere near a practical reality.
I am sorry that the Minister has departed from any attempt to meet us on this subject or to reach any kind of agreement. I listened to what he said and I heard his predecessor last July say something very similar. I heard him put the arguments eloquently at all stages of the Bill. When he said that we had been over this ground before, he should have said that throughout the entire proceedings of the Bill, during five months of steady deliberation, the Government have not budged their position one iota, to try to get this all-party agreement. The Bill remains in every essential feature precisely as it was on 1st July his year. Not only is the Bill unamended but we have heard exactly the same arguments from the Minister using the same item-by-item approach to stonewall arguments from the Conservative benches to defend the position of married women.
I detected one slight change when the Minister said that he accepted that there was an increase and that even his child at a primary school could tell that 06 per cent to 2 per cent. constituted an increase. There were times in his speech today when he was dealing with what will happen next year when I felt that the fact was being fairly effectively cloaked. But at other times, the Minister was stating flatly that what is proposed in the Bill is a large increase. At times he almost as clearly said that even at 0·6 per cent. the system represented a bargain for women and that it would be a bad bargain if they did not take it. He said there was nothing wrong in exercising the option, and that it makes


perfectly good sense for three out of four working women to do so. But as soon as he had said that he was making this increase above what we had proposed and above the fair market rate of 0·6 per cent., he began to explain the cross-subsidy that is always involved in the national insurance scheme and that was even involved in the Boyd-Carpenter arrangements which have prevailed so far.
I do not want to be unkind to the Minister because he gave a clear description of the cross-subsidy element involved in the system, but he had no need to lecture us in this way about it. As he discovered when he returned to our amendment, we have attempted to meet the Government half way. The Government have not shifted from their position in July, so we have moved from ours. We say that if, for the sort of reasons indicated by the hon. Member for Islington, South and Finsbury (Mr. Cunningham), they feel that some element of cross-subsidy from married women to others is justified, then that figure should be 1 per cent. instead of 0·6 per cent. He cannot therefore accuse us of trying to relieve the better-off married woman from subsidising other contributors. We have chosen in our amendment to accept the figure of 1 per cent., which represents half as much again as the fair market rate should be if the contributors were simply paying for the benefits they themselves receive.

5.30 p.m.

Having moved that far towards the Government, still we find that there is no attempt to settle, no attempt to enter into any kind of market haggling. We are told that it is a question of political judgment that divides us. A figure chosen in July is still the Government's figure, and it is clear that there is not a chance of the Minister's moving from it. In trying to justify it, he is reduced to saying that it is simply a matter of political judgment. For all the other matters that he went through, and the discussions with hon. Members about the word "actuarial" and how it entered into our arguments, I am sure that he will agree when he gets down to it that his figure of 2 per cent. is simply plucked out of the air as a judgment by the Government of what they can get away with in asking women to pay more next year.

We heard a marvellous phrase when the Minister spoke about how far the figure was from actuarial calculations. We heard that the Government would not apply absolute actuarial calculations. I am not sure what the precise opposite of "absolute" is, but how far away can one get when the Government's figure, plucked out of the air, is so much without reference to an actuarial considerations that it is more than 300 per cent. of the market rate for those women who pay for the benefits they will receive, if they continue to exercise the option?

Apparently, I have yet again provoked the hon. Member for Islington, South and Finsbury. I was going to deal with his defence of the Government's figure. It was an interesting and original contribution, as we expect of the hon. Gentleman, who shares with my hon. Friend the Member for Kensington (Sir B. Rhys Williams) a great knowledge of the intricacies of the national insurance system and an ability to put arguments that are completely different from those of his Front Bench. Both the hon. Gentleman and my hon. Friend provide valuable insights for both Front Benches. But on this occasion the hon. Gentleman has found, as I suspect he will on the next amendment, reasons for supporting the Government's changes which bear no relation to the reasons put forward by his Ministers.

The hon. Gentleman came up with the extremely ingenious argument that we should go well beyond a strict actuarial calculation, based only on the benefits received by exercising the option, and regard the contribution as in some way paying for the £6 benefit that every married woman receives from her husband's contribution. It is an interesting and ingenious argument, but the hon. Gentleman knows that it marks a complete departure from the way in which the matter has been approached in the past. If a married woman who goes out to work is suddenly to be expected to make a contribution towards the pension her husband earns for her as a married woman's benefit, it makes for an extraordinary anomaly between the married woman who goes to work and the married woman who does not and who contributes nothing to the £6 benefit she receives as a result of her husband's contribution.

Mr. George Cunningham: Is that anomaly any greater than that where the same difference exists between the married woman who opts out and receives the £6 pension and the single woman or the single man who pays for it but never receives any benefit in respect of it?

Mr. Clarke: The single man receives his £10 pension for himself, although part of his contribution is also going to the benefit of married women. It could be said that throughout the system single people tend to subsidise married people, and that all tend to subsidise married women to some extent. It seems to me and the Opposition that a fresh complication is being introduced, suddenly, to try to scoop some of that money back from married women who go out to work, leaving married women who do not go out to work totally subsidised. The best approach in these rough actuarial calculations, which Governments have always tried to follow in the past, is to regard the £6 and associated benefits of married women as dependent on the husband's contribution, and to accept that there is a cross-subsidy from other contributors.
The hon. Gentleman's argument is in no way the Government's. They seem to accept our arguments on the actuarial calculations, and then coolly depart from the market rate which they can agree with us on the basis of those actuarial calculations. The Under-Secretary did not try to dodge this in Committee. He began his contribution on the subject by saying:
In trying to deal with the issues raised on this amendment, which seeks to reduce the class 1 primary contribution from 2 per cent. to 1 per cent., commonly referred to as the married woman's option, may I take straight away the point raised by the hon. Member for Rushcliffe, who asked about the actuarial basis? I am advised that the industrial injury and health service contribution that would be attributed to this category of women would be the 0·6 per cent. that was written into the 1973 Act. But, as both Government and Opposition have proposed an increase from 0·6 per cent. to different levels, it may be presupposed that both of us admit that 0·6 per cent. is inadequate to meet the present pension level, and that the argument between us is not sticking strictly to an actuarial basis, but the extent to which one should depart from it."— [OFFICIAL REPORT, Standing Committee A; 14th November 1974, c. 67–68.]
I told the hon. Gentleman then, and I remind him now, of the trap he opens

up for the Minister of State when he raises his actuarial arguments on the selfemployed. The Under-Secretary agrees with us that the actuarial rate, the market rate, is 0·6 per cent. The hon. Gentleman examined our 1973 structure and has chosen to more than treble the 0·6 per cent. Why does he take such a breathtaking risk, which his right hon. Friend the Secretary of State for Prices and Consumer Protection would not allow to be taken with the price of any other commodity for which married women have to pay in these inflationary times? The hon. Gentleman does so for the reasons that my hon. Friend the Member for Lancaster pointed out forcefully. Married women are being treated by the Government as a convenient way of raising money, sheer cash, millions of pounds' worth of it that otherwise they would have to raise from other categories of contributors—in particular, employees, whom they regard as simply untouchable beyond what they have already done.
The Minister cannot get away from the fact that he has plucked the figure out of the air in order to raise from married women almost a third of the new burden imposed by the Bill. Of the £150 million that he needs, £47 million will come from married women exercising the option. It is a dramatic increase compared with what they would otherwise have to pay. The woman earning £2,000 a year—the £40-a-week woman to whom the Minister referred—who might have been paying £12 a year under the 1973 proposal of 0·6 per cent., finds her contribution raised to £40 a year under the Minister's proposals, simply because she is seen as the most convenient, handy source of revenue to subsidise the rest of the scheme. The cross-subsidy from that married woman is out of all proportion to any of the other cross-subsidies about which we have argued between categories of contributors in all the rest of the national insurance structure.
How should we judge what the effect will be on married women next year? The Minister emphasised that the approach must be that they will not mind, that they will not even notice that the market rate has been more than trebled for them, because many of them will find next April that in cash deducted from their earnings they will be paying less. The Minister is clearly prepared to deal


with these graduated contributions on the basis that they are just a form of personal taxation, and that the married woman paying them will not go into the intricacies but will simply find next April that in many cases the deduction from their pay is slightly less. Therefore, they will not realise how they have been singled out for this additional percentage.
If the Government are to adopt this approach, why will they not adopt it for any other category of employed persons covered by the Bill? Why do not they adopt the same approach to the ordinary employee? The majority of employees will find that they are paying somewhat less in April next year as a deduction from their pay packets. Why do the Government not accept the offer which the Opposition made, by amendment, of £87 million just by putting up these contributions by one quarter of 1 per cent.? For the most part that would not be noticed in April of next year because the burden of employees will be reduced. Our amendment would make only a tiny difference. Why will the Government not adopt that approach?
I shall not trespass on the second amendment, but we have never had the pleasure of hearing the Under-Secretary of State telling us how he would address the arguments that we have heard to the self-employed man who finds that his contribution will go up by £3 a week in April. When we turn to the self-employed no doubt we shall find that the Minister of State will use different arguments and will make no reference to what has been said by the Under-Secretary of State.
Why will the Government not adopt the approach that we suggest? We suspect it is because any suggestion of any minor increase beyond what is now being asked for from employees would enrage the great block of those in the trade union movement on whom they are so dependent. We suggest that the Government are so prejudiced about the married woman's option and are so anxious to eliminate it before they have made any step towards equal benefits for women that they are prepared to accept that it is the most convenient way of imposing an increased burden of contribution towards the national insurance system.
We cannot accept that. We regret that the Government have failed to move

since we started arguing this matter. We shall press this amendment in the hope that even at this stage the Government will recognise and accept our views.

Mr. Robert Boscawen: I have not had the advantage of some of my hon. Friends who took part in the proceedings in Committee of learning all the niceties of the actuarial disadvantages of married women exercising the option under this Bill. I look at this matter from a simpler approach. I have tried to understand why the Government have started to introduce this blatant discrimination against the women who exercise the married woman's option.
It is clear to me that the answer was given by the Under-Secretary of State in Committee on 20th November. He said:
Hon. Members will know that Labour Members steadfastly opposed the continuance of the married woman's option during the passage of the Social Security Bill.
That is the 1973 Bill. He continued:
It is still our conviction that it is wrong to encourage married women to sign away their rights to contribute to pensions of their own. Under our scheme for better pensions, for which a Bill has been promised this Session, married women who go out to work and pay full contributions will receive the same pensions as men and single women with the same earnings record. The married woman's option will be abolished…."—[OFFICIAL REPORT, Second Standing Committee on Statutory Instruments, 20th November 1974; c. 4.]
The married woman's option will be abolished. That is the purpose of trying to squeeze out the married woman inch by inch—this time it happened to be a big inch—and to make it not worth while their continuing to opt out.

5.45 p.m.

I believe that that is entirely the wrong approach. Three out of four women now exercise their free choice in this matter. It is vitally important that we should continue to allow them to do so. The Bill is just one more attempt by the Government to reduce the amount of free choice open to our citizens. The majority of women who exercise the married woman's option do so because they believe that they get a better deal out of it.

The philosophy of our basic national insurance scheme has always been that it should provide family cover. The married man was able at a reduced rate to provide good and worthwhile cover for


his wife and any children he might have. There is nothing subservient about that. I do not believe that that makes married women second-class citizens. I do not believe that there is anything that we should be ashamed of by allowing them their option.

Women should be able to exercise a free choice. It is important that married women who do not go out to work should be able to do so. They should not be made to pay a greatly increased contribution if they cannot go out to work or do not wish to do so. For example, if they have special problems in their homes. Their lot will be a great deal more difficult because of this Bill.

It is especially important that married women who remain at home to look after their families, particularly when they have children with special problems, should not be penalised. What the married woman's option was designed to do from the beginning was to help women with problems at home. It was not just designed to help the majority of women. It was not designed primarily to help the mass of wives who are able to go out to work and earn good wages. It was designed to help in particular the married woman who has to stay at home to look after her family in special conditions. Not only that, it was designed to help the family in which the husband has a lot of sickness and is not able to bring so much money into the home as would otherwise be the case.

There is thus a need for a reduced contribution for the wife. I do not think that that is a disadvantage. In fact it is a great advantage. It seems that the Government are trying to change what has been the philosophy of the scheme ever since its inception. I deplore that. They are trying to do so in the rather underhanded way of squeezing the married woman's option rather than coming out openly and saying that the purpose of the Bill is to make the married woman's option not worth while so that when it comes to the point of abolishing it altogether there will be no objection. That is the reason behind it. I have not heard any suggestion that there are any other genuine reasons for raising the level of contributions in this way.

The wife who goes out to work and who receives a large pay packet is in a position to pay the full rate of contribution if she wishes to do so. I cannot understand why the Government wish to penalise the married women who cannot go out to work. That is the basis of the Bill. The Government are taking away one of the major advantages of the present system. From the beginning it was designed to provide family cover and to give help and better security to those who far various reasons have difficulties at home.

I shall oppose any measure which will make it more difficult for women to exercise a free-choice. The Bill is a means of removing that choice, and it is doing so in almost a sleight of hand manner. That is why I shall oppose it.

Miss Harvie Anderson: I must admit that it had not been my intention to take part in this debate—on the good ground that I recalled an occasion some Parliaments ago when I took part in a precisely similar debate at great length. I think that it was the sight of the Minister of State that made me realise that once more I must express my resentment at the proposal now before us. I am sorry that the Minister of State is not present, but I am delighted to see that the Under-Secretary of State is in the Chamber. I know that he will listen carefully to the persuasions that I shall add to those so effectively made already.
This is a repeat performance of a lengthy and drawn-out debate which continued not just for weeks but for many months. I am glad to say that on that occasion the outcome was highly satisfactory, because a General Election took place before the Bill was passed. I would not be quite so optimistic as to suggest that the same will happen again on this occaison, but I repeat my complete opposition to the proposal before us now.

Mrs. Jill Knight: Does not my right hon. Friend think it noteworthy that the Government withdrew a similar Bill just before the General Election? Does not she agree that the women of the country have yet to become aware of what is to hit them very shortly?

Miss Harvie Anderson: I entirely support that point. I do not think that the


majority of married women recognised, when it was first introduced, that this proposal would be put into law, and I think that the most serious aspect is that it seems to be the thin end of a wedge which is going to be pushed further.
I am glad to see the Under-Secretary of State looking so anxious, because if it is not the thin end of a wedge we shall be glad to hear it, but may I remind him that this is a convenient method of raising some £47 million additional by advancing a contribution from married women by a rise in contribution greater than one would expect. If that is as far as the Government are going to go ever, good and well. Incidentally I was not consoled earlier in the debate to hear mentioned earnings of £2,000 a year in terms which did not remind the House that when women earn they also pay tax.
We are not dealing with additional payment of an exclusive form of tax falling on married women. Many married women who work, or, indeed, who do not work, also contribute. Where there is an option which gives certain benefit, as this does, to a married woman who contracts out, that benefit is but a small reward for the household contribution she makes. I am sure that not all hon. Members realise that most women; even Members of Parliament, frequently cook the breakfast at home. We do not get paid for it directly, but we are happy to have some indirect benefit as in the advantage of a married women's contribution.
I want to register a protest now, lest this proposal by the Government be the thin end of a wedge which will go ever forward so that married women will have to pay a greater proportion of tax raised than they do at present, and the intention here is, I suspect, to decrease the built-in benefits which we have enjoyed for so many years.
Millions of women accept and take this benefit for granted. They do not yet realise that it is likely to be removed. Even if it is not likely to be removed from them wholly this clause will make a very considerable additional payment necessary in the very near future.

Mrs. Knight: In Committee we argued the case strongly for the situation of women who go out to work. I never felt that I received a proper answer to the point I made about the vast differences

there are in the conditions of women who go out to work. I do not feel that the Government, in what they intend to do by the Bill, have ever come face to face properly with the fact that some women work for a very short time, that some women work for years after their children grow up, and that some are physically incapable of going out to work. The Bill supposes and demands that women should pay a great deal more money than at present, and for no more in return.

Mr. Alec Jones: How can the hon. Lady continue to mislead the House by suggesting that there is to be an increased contribution? There are other arguments, but no one can suggest that a reduction of £1·57 a week in contribution is anything but a reduction.

Mrs. Knight: The hon. Gentleman cannot get away with that. He tries, and we must give him 10 out of 10 for trying, but he knows as well as anyone else that the basis of the Bill, as of the Conservative Government's measure earlier, is that contributions and benefits have to be put on a different basis from their present basis. There is no doubt about it.
I thought that we had progressed beyond that to the argument in which we were comparing this Bill with the Conservative measure, which was designed to introduce a firm actuarial basis for benefits, including the increased benefits which we all welcome. The Bill greatly upgrades the amount of money women were going to have to pay under the Conservative legislation. That is what we are arguing about. We are not suggesting that the system ought not to be put on a firm actuarial basis. The argument is that we should do it as fairly as we can. Our argument in Committee was that to expect women to bear an unfair share—£47 million—of the increase demanded was unjust.
The Government must recognise that it is very difficult to set women's circumstances into a neat pattern when asking for payments on their behalf, because they are not able to have such a record of contributions men can very easily have. Males are very fortunate to be males in this respect, because for women it has always been very difficult to keep up comparable contribution records. Unless a woman is single, and remains single and


healthy, she has not a hope of matching the contribution record of a man. The Government must recognise that they are demanding from women a very unfair proportion of the extra money needed. They are telling them not only that they must pay this unfair proportion, but do so for no extra benefit whatever.
This is what will be so annoying and infuriating to many women outside the House when they realise what the Government are doing to them. Women who have been out to work for a long time

will pay a lot of money under this Bill. Women who have been at work for a short time will not pay nearly as much. It is because of the difficulty in getting a clearly equal contribution that former Governments have recognised that for women the option system is fair and good because they have to be covered by their husband's contributions.

Question put, That the amendment be made:—

The House divided: Ayes 249, Noes 301.

Division No. 15.1
AYES
[6.0 p.m.


Adley, Robert
Farr, John
Kershaw, Anthony


Aitken, J. W. P.
Fell, Anthony
Kimball, Marcus


Alison Michael
Finsberg, Geoffrey
King, Evelyn (South Dorset)


Arnold, Tom
Fisher, Sir Nigel
Kirk, Peter


Atkins, Rt Hn H. (Spelthorne)
Fletcher, Alex (Edinburgh N)
Kitson, Sir Timothy


Awdry, Daniel
Fletcher-Cooke, Charles
Knight, Mrs Jill


Bain, Mrs Margaret
Fookes, Miss Janet
Knox David


Banks, Robert
Fowler, Norman (Sutton C)
Lamont, Norman


Bell, Ronald
Fox, Marcus
Lane, David


Bennett, Sir Frederic (Torbay)
Fraser, Rt Hon H. (Stafford &amp; St)
Langford-Holt, Sir John


Bennett, Dr Reginald (Fareham)
Fry, Peter
Latham, Michael (Melton)


Benyon, W. R.
Galbraith, Hon T. G. D.
Lawson, Nigel


Berry, Hon Anthony
Gardiner, George (Reigate)
Le Merchant, Spencer


Biffen, John
Gardner, Edward (S Fylde)
Lester, Jim (Beeston)


Biggs-Davison, John
Gilmour, Rt Hon Ian (Chesham)
Lloyd, Ian (Havant)


Blaker, Peter
Gilmour, Sir John (East Fife)
Loveridge, John


Body, Richard
Glyn, Dr Alan
Luce, Richard


Boscawen, Hon Robert
Godber, Rt Hon Joseph
McAdden, Sir Stephen


Bowden, Andrew (Brighton)
Goodhart, Philip
MacCormick, lain


Boyson, Dr Rhodes (Brent)
Goodhew, Victor
McCrindle, Robert


Braine, Sir Bernard
Goodlad, A.
Macfarlane, Nell


Brittan, Leon
Gow, I. (Eastbourne)
MacGregor, John


Brotherton, M.
Gower, Sir Raymond (Barry)
Macmillan, Rt Hn M. (Farnham)


Brown, Sir Edward (Bath)
Griffiths, Eldon
McNair-Wilson, p. (New Forest)


Bryan, Sir Paul
Grist, Ian
Madel, David


Buchanan-Smith, Alick
Grylls, Michael
Marshall, Michael (Arundel)


Buck, Antony
Hall, Sir John
Mates, Michael


Budgen, Nick
Hall-Davis, A. G. F.
Mather, Carol


Bulmer, Esmond
Hamilton, Michael (Salisbury)
Maude, Angus


Butler, Adam (Bosworttt)
Hampson, Dr Keith
Maudling, Rt Hon Reginald


Carlisle, Mark
Hannam, John
Mawby, Ray


Carr, Rt Hon Robert
Harrison, Sir Harwood (Eye)
Maxwell-Hyslop, Robin


Chalker, Mrs Lynaa
Harvle Anderson, Rt Hn Miss
Mayhew, Patrick


Channon, Paul
Hastings, Stephen
Meyer, Sir Anthony


Churchill, W. S.
Havers, Sir Michael
Miller, Hal (Bromsgrove)


Clark, Alan (Plymouth, S)
Hawkins, Paul
Mills, Peter


Clark, William (Croydon S)
Hayhoe, Barney
Miscampbell, Norman


Clarke, Kenneth (Rushcliffe)
Heath, Rt Hon Edward
Mitchell, David (Basingstoke)


Cockcroft, John
Henderson, Douglas
Moate, Roger


Cooke, Robert (Bristol W)
Heseltine, Michael
Molyneaux, James


Cope, John
Hicks, Robert
Monro, Hector


Cormack, Patrick
Higgins, Terence L.
Montgomery, Fergus


Corrie, John
Holland, Philip
Moore, John (Croydon C)


Costain, A. P.
Hordern, Peter
More, Jasper (Ludlow)


Crawford, Douglas
Howe, Rt Hon Sir Geoffrey
Morgan, Geraint


Critchley, Julian
Howell, David (Guildford)
Morgan-Giles, Rear-Admiral


Crouch, David
Howell, Ralph (North Norfolk)
Morris, Michael (Northerns)


Davies, Rt Hon J. (Knutsford)
Hunt, John
Morrison, Charles (Devizes)


Dodsworth, Geoffrey
Hurd, Douglas
Morrison, Peter (Chester)


Douglas-Hamilton, Lord James
Hutchison, Michael Clark
Mudd, David


du Cann, Rt Hon Edward
Irvine, Bryant Godman (Rye)
Neave, Alrey


Durant, Tony
Irving, Charles (Cheltenham)
Nelson, Anthony


Eden, Rt Hon Sir John
James, David
Neubert, Michael


Edwards, Nicholas (Pembroke)
Jenkin, Rt Hon Patrick (Redbr)
Newton, Tony


Elliott, Sir William
Jessel, Toby
Nott, John


Emery, Peter
Johnson Smith, G. (E Grinstead)
Onslow, Cranley


Ewing, Mrs Winifred (Moray)
Jones, Arthur (Daventry)
Oppenheim, Mrs Sally


Eyre, Reginald
Joseph, Rt Hon Sir Keith
Page, John (Harrow West)


Fairbairn, Nicholas
Kaberry, Sir Donald
Parkinson, Cecil


Fairgrieve, Russell
Kellett-Bowman, Mrs Elaine
Pattle, Geoffrey




Percival, Ian
Scott-Hopkins, James
Trotter, Neville


Peyton, Rt Hon John
Shaw, Giles (Pudsey)
Tugendhat, Christopher


Pink, R. Bonner
Shelton, William (Lambeth, St)
Vaughan, Dr Gerard


Powell, Rt Hon J. Enoch
Shepherd, Colin
Viggers, P. J.


Price, David (Eastleigh)
Silvester, Fred
Wakeham, John


Prior, Rt Hon James
Sims, Roger
Walker Rt Hon P. (Worcester)


Pym, Rt Hon Francis
Sinclair, Sir George
Walker-Smith, Rt Hon Sir Derek


Raison, Timothy
Skeet, T. H. H.
Walters, Dennis


Rathbone, Tim
Smith, Dudley (Warwick)
Warren, Kenneth


Rawlinson, Rt Hon Sir Peter
Spence, John
Weatherill, Bernard


Rees, Peter (Dover &amp; Deal)
Spicer, James (W Dorset)
Wells, John


Reid, George
Spicer, Michael (S Worcester)
Welsh, Andrew


Renton, Rt Hn Sir D. (Hunts)
Sproat, lain
Whitelaw, Rt Hon William


Renton, Tim (Mid-Sussex)
Stainton Keith
Wiggin, Jerry (Weston-s-Mare)


Rhys Williams, Sir Brandon
Stanbrook, Ivor
Wilson, Gordon (Dundee E)


Ridley, Hon Nicholas
Stanley, John
Winterton, Nicholas


Ridsdale, Julian
Stewart, Donald (Western Isles)
Wood, Rt Hon Richard


Rifkind, Malcolm
Stewart, Ian (Hitchin)
Young, Sir George (Ealing)


Roberts, Michael (Cardiff NW)
Stokes, John
Younger, Hon George


Roberts, Wyn (Conway)
Tapsell, Peter



Ross, William (Londonderry)
Taylor, Teddy (Glasgow, C)
TELLERS FOR THE AYES:


Rossi Hugh (Hornsey)
Temple-Morris, P.
Mr. John Stradling Thomas and


Rost, Peter (SE Derbyshire)
Thatcher, Rt Hon M.
Mr. Hamish Gray.


Royle, Sir Anthony
Thompson, George



Sainsbury, Tim
Townsend, Cyril D.





NOES


Abse, Leo
Dalyell, Tarn
Grocott, Bruce


Allaun, Frank
Davidson, Arthur
Hamilton, W. W. (Central Fife)


Anderson, Donald
Davies, Bryan (Enfield N)
Hamling, William


Archer, Peter
Davies, Denzil (Llaneill)
Hardy, Peter


Armstrong, Ernest
Davies, Ifor (Gower)
Harper, Joseph


Ashley, Jack
Davis, S. Clinton (Hackney C)
Harrison, Walter (Wakefield)


Ashton, Joe
Deakins, Eric
Hart, Rt Hon Judith


Atkins, Ronald (Preston N)
Dean, Joseph (Leeds West)
Hatton, Frank


Atkinson, Norman
de Freitas, Rt Hon Sir Geoffrey
Hayman, Mrs H.


Bagier, Gordon A. T.
Delargy, Hugh
Healey, Rt Hon Denis


Barnett, Guy (Greenwich)
Dell, Rt Hon Edmund
Heffer, Eric S.


Barnett, Joel (Heywood)
Dempsey, James
Hooley, Frank


Bates, Alf
Doig, Peter
Hooson, Emlyn


Bean, Robert E.
Dormand, Jack
Horam, John


Beith, A. J.
Douglas-Mann, Bruce
Howells, Geraint (Cardigan)


Benn, Rt Hn Anthony Wedgwood
Duffy, A. E. P.
Huckfield, Leslie


Bennett, Andrew (Stockport N)
Dunlop, J.
Hughes, Rt Hon C. (Anglesey)


Bidwell, Sydney
Dunn, James A.
Hughes, Robert (Aberdeen N)


Bishop, Edward
Dunnett, Jack
Hunter, Adam


Blenkinsop, Arthur
Dunwoody, Mrs. Gwyneth
Irvine, Rt Hon Sir A. (L'pool)


Boardman, H.
Eadie, Alex
Irving, Rt Hon S. (Dartford)


Booth, Albert
Edelman, Maurice
Jackson, Colin (Brighouse)


Boothroyd, Miss Betty
Edge, Geoffrey
Jackson, Miss Margaret (Lincoln)


Bottomley, Rt Hon Arthur
Edwards, Robert (Wolv SE)
Janner, Greville


Boyden, James (Bish Auck)
Ellis, John (Brigg &amp; Scun)
Jay, Rt Hon Douglas


Bradley, Tom
Ellis, Tom (Wrexham)
Jeger, Mrs Lena


Bray, Dr Jeremy
English, Michael
Jenkins, Hugh (Wandsworth)


Broughton, Sir Alfred
Ennals, David
John, Brynmor


Brown, Hugh D. (Glasgow, Pr)
Evans, Fred (Caerphilly)
Johnson, James (Kingston W)


Brown, Robert C. (Newcastle)
Evans, Gwynfor (Carmarthen)
Johnson, (Derby S) Walter


Brown, Ronald (Hackney S)
Evans, loan L. (Aberdare)
Jones, Barry (East Flint)


Buchan, Norman
Evans, John (Newton)
Jones, Dan (Burnley)


Buchanan, Richard
Ewing, Harry (Stirling)
Jones, Alec (Rhondda)


Butler, Mrs Joyce (Haringey)
Faulds, Andrew
Judd, Frank


Callaghan, Jim (Middleton &amp; P)
Fernyhough, Rt Hon E.
Kaufman, Gerald


Campbell, Ian
Fitch, Alan (Wigan)
Kelley, Richard


Canavan, Dennis
Fitt, Gerard (Belfast)
Kerr, Russell


Cant, R. B.
Flannery, Martin
Kilroy-Silk, Robert


Carmichael, Nell
Fletcher, Ted (Darlington)
Kinnock, Nell


Carter, Ray
Foot, Rt Hon Michael
Lambie, David


Carter-Jones, Lewis
Ford, Ben T.
Lamborn, Harry


Cartwright, J.
Forrester, John
Lamond, James


Castle, Rt Hon Barbara
Fowler, Gerald (The Wrexin)
Leadbitter, Ted


Clemitson, I. M.
Fraser, John (Lambeth, N)
Lee, John


Cocks, Michael (Bristol S)
Freeson, Reginald
Lestor, Miss Joan (Eton &amp; Slough)


Cohen, Stanley
Freud, Clement
Lever, Rt Hn Harold


Coleman, Donald
Garrett, John (Norwich S)
Lewis, Ron (Carlisle)


Colquhoun, Mrs Maureen
Garrett, W. E. (Wallsend)
Lipton, Marcus


Conlan, Bernard
George, Bruce
Litterick, Tom


Cook, Robin F. (Edin C)
Gilbert, Dr John
Lomas, Kenneth


Corbett, Robin
Ginsburg, David
Loyden, Eddie


Craigen, J. M. (Glasgow, M)
Golding, John
Luard, Evan


Crawshaw, Richard
Gould, Bryan
Lyon, Alexander (York)


Cryer, Bob
Gouriay, Harry
Lyons, Edward (Bradford W)


Cunningham, G. (Islington S)
Graham, Ted
McCartney, Hugh


Cunningham, Dr J. (Whiten)
Grant, George (Morpeth)
McCusker, Harold







McElhone, Frank
Perry, Ernest
Thomas, Dafydd (Merioneth)


MacFarquhar, R.
Phipps, Dr Colin
Thomas, Jeffrey (Abertillery)


Mackenzie, Gregor
Prentice, Rt Hon Reg
Thomas, Mike (Newcastle)


Mackintosh, John P.
Prescott, John
Thomas, Ron (Bristol NW)


Maclennan, Robert
Price, William (Rugby)
Thorne, Stan (Preston)


McMillan, Tom (Glasgow C.)
Radice, Giles
Thorpe, Rt Hon Jeremy (Devon)


McNamara, Kevin
Richardson, Miss Jo
Tierney, Sydney


Madden, Max
Roberts, Albert (Normanton)
Tinn, James


Magee, Bryan
Roberts, Gwilym (Cannock)
Tomlinson, John


Mahon, Simon
Roderick, Caerwyn
Tuck, Raphael


Mallalieu, J. P. W.
Rodgers, George (Chorley)
Urwin, T. W.


Marks, Ken
Rodgers, William (Teesside)
Varley, Rt Hon Eric G.


Marquand, David
Rooker, J. W.
Wainwright, Edwin (Dearne V)


Marshall, Dr Edmund (Goole)
Roper, John
Wainwright, Richard (Colne V)


Marshall, Jim (Leicester)
Ross, Stephen (Isle of Wight)
Walden, Brian (B'ham, L'dyw'd)


Mason, Rt Hon Roy
Ross, Rt Hon W. (Kilm'nock)
Walker, Harold (Doncaster)


Maynard, Miss Joan
Rowlands, Ted
Walker, Terry (Kingswood)


Meacher, Michael
Ryman, John
Ward, Michael


Mellish, Rt Hon Robert
Sandelson, Neville
Watkins, David


Mendelson, John
Sedgemore, B.
Watkinson, John


Mikardo, Ian
Selby, Harry
Weetch, Ken


Millan, Bruce
Shaw, Arnold (Redbridge, Ilf)
Weitzman, David


Miller, Mrs Millie (Redbridge)
Sheldon, Robert (Ashton-u-Lyne)
Wellbeloved, James


Molloy, William
Shore, Rt Hon Peter
White, Frank R. (Bury)


Moonman, Eric
Short, Rt Hon Edward (Newcastle C)
 White, James (Glasgow, P)


Morris, Alfred (Wythenshawe)
Short, Mrs Renée (Wolv NE)
Whitehead, Phillip


Morris, Charles R. (Openshaw)
Silkin, Rt Hn John (Lewish)
Whitlock, William


Morris, Rt Hon John (Aberavon)
Silkin, Rt Hn S. C. (Southwk)
Wigley, Dafydd (Caernarvon)


Mulley, Rt Hon Frederick
Sillars, James
Willey, Rt Hon Frederick


Newens, Stanley
Silverman, Julius
Williams, Alan (Swansea)


Noble, Mike
Skinner, Dennis
Williams, Alan, Lee (Haver'g)


Oakes Gordon
Small, William
Williams, Rt Hn Mrs S (Hertford)


Ogden, Eric
Smith, Cyril (Rochdale)
Williams, W. T. (Warrington)


O'Halloran, Michael
Smith, John (N Lanarkshire)
Wilson, Alexander (Hamilton)


O'Malley, Brian
Snape, Peter
Wilson, Rt Hon H. (Huyton)


Orbach, Maurice
Spearing, Nigel
Wilson, William (Coventry SE)


Orme, Rt Hn Stanley
Spriggs, Leslie
Wise, Mrs Audrey


Ovenden, John
Stallard, A. W.
Woodall, Alec


Palmer Arthur
Steel, David (Roxburgh)
Woof, Robert


Park, George
Stewart, Rt Hn Michael (H'smith, F)
Wrigglesworth, Ian


Parker, John
Stoddart, David
Young, David (Bolton E)


Parry, Robert
Stott, Roger



Pavitt, Laurie
Strang, Gavin
TELLERS FOR THE NOES:


Peart, Rt Hon Fred
Strauss, Rt Hon G. R.
Mr. Thomas Cox and


Pendry, Tom
Summerskill, Hon Dr Shirley
Mr. James Hamilton.


Penhaligon, David
Swain, Thomas

Question accordingly negatived.

Sir Geoffrey Howe: I beg to move Amendment No. 2, in page 2. line 20, leave out from '£2,500)' to end of line 21.
There is intense feeling throughout the country about this subject. The proposals put forward by the Government to increase the contributions payable by the self-employed have given rise to feelings of deep and still mounting anger in many places and amongst many groups of people. That anger, which is well justified, will continue to grow if the Government remain as intransigent and as entrenched as they are on this part of the Bill. The Government's proposals to place a larger burden upon the self-employed are unjust, discriminatory, insensitive and unnecessary. Outside the House they can be seen only as evidence of the Government's total lack of sympathy and understanding of the 2 million people who work in their own busi-

nesses and professions and make up the self-employed.
May I make clear at the outset what the Opposition are not arguing on the amendment? We are not challenging or seeking to obstruct the payment and financing of the higher benefits, which we welcome. We are not, as the Minister somewhat tawdrily tried to argue in an earlier debate, jeopardising the National Insurance Fund. Having sat through the Committee proceedings of this Bill, the Minister knows that we put forward alternative methods of raising the money which we say should not be raised by this impost on the self-employed. We suggested, on the one hand, an increase of ¼ per cent. on the contribution payable by the employed and, on the other hand, a modest increase in the flat-rate payment due from the self-employed. Either one of those methods or a combination of the two would have been acceptable and a fairer way of raising the additional money.

6.15 p.m.

We are not seeking to go back on the principle of earnings-related contributions towards the financing of the basic State pension. I accept that the introduction of that principle in relation to the self-employed was bound to give rise to some misunderstanding and anxiety because it represented a change. It may be that the step which the Conservative Government took towards the introduction of that principle went too far too fast. There will be scope for argument about that. If that is so, it surely emphasises the total folly of the Government's decision, at the time of the introduction of a new system that is bound to cause misunderstanding and anxiety, to go for an even larger increase in the contributions due from the self-employed. It is folly of the most extreme kind to have moved in that direction.

I remind the House of the facts. The Social Security Act 1973 proposed that the self-employed should pay a contribution of 5 per cent. on the band of earnings between £1,150 and £2,500 a year. The Bill proposes to raise and widen that band of earnings by substituting a band of from £1,600 to £3,600 and, in addition, to raise the level of contribution from 5 per cent. to 8 per cent. It may be that the higher band is justified, at least in part, by the movement since then in prices and earnings. Even so, it means an increase in the sum that will be due. To raise the 5 per cent. to 8 per cent. as well means an even larger amount of money to be extracted from the self-employed.

At the top of that band of earnings, someone who earns £69 a week in self-employment will have to find £160 as a lump sum for one year's contributions. That lump sum is not tax-deductable, so he will have to pay it out of his taxed income. To raise that £160 a year he will need to earn £238 a year more simply to maintain the cash value of his income, leaving inflation on one side. That burden of £160 net, £238 gross, falling on the self-employed is seen to be in reality an additional tax. That is the reason why it is so deeply resented. If the bands had to go up and the figure had to rise to a higher limit of £3,600, there would be a case for, if anything, a lower percentage rate as a first step towards the introduction of a system of earnings-related payments from the self-employed. But the

Government will have nothing to do with that suggestion. Instead, astonishingly and unnecessarily, they have gone for a higher percentage burden of 8 per cent. This represents a huge new impost, which is quite unbelievable.

There is an astonishing contrast between the Government's attitude on this point and their approach to the abolition of the married women's option, which was the subject of the debate on the previous amendment. The Government recognised that the abolition of that option should be brought about carefully. The point was made explicitly by the Minister in Committee, when he said, on the married women's option
We recognise, of course, that for many married women who have already opted not to pay the full contributions the abrupt withdrawal of this option 'would cause a sharp reduction in their take-home pay'. That is why the Government undertook and are now carrying out discussions with organisations representing employers and employees to see how best to phase out the existing system."— [OFFICIAL REPORT, Standing Committee A, 14th November 1974 c. 72.]

The Government then saw the need for gradualism. They adopted a phrase which seems to come so readily to their lips and began to talk of "phasing out" the option. They recognised the case against this being carried out too swiftly. But in the present case we see no comparable consideration for the self-employed. There is no question of phasing in the increases against which we are protesting. On the contrary there is a determination to slam on a higher rate which will have the effect, not of phasing people in or out, but of grinding down the self-employed who already face considerable burdens.

The House may like to consider a comparison between what is being done in regard to the self-employed and what is being done in respect of other contributors to the fund. The most important thing to remember is that while the self-employed face this large increased burden, the employed people, those who are paying class 1 contributions, will have to bear no increased burdens under the present legislation. The total sum of £150 million must be found to put the insurance fund back into proper balance.

That sum is being found first by extracting from employers a sum of £59 million, from the married woman there


will be a sum of £47 million, the Exchequer is chipping in £23 million, the self-employed are coming in with £21 million—and employees will pay nothing at all.

Mr. O'Malley: In Committee I referred to the figure of £150 million. The more accurate figure is not £150 million, but £610 million extra that is being raised. I have already given the breakdown of the £610 million. Therefore, the right hon. and learned Gentleman should be discussing that figure rather than the £150 million, which I tried to correct in Committee.

Sir G. Howe: That takes a number of other factors into account. The breakdown which my hon. Friend the Member for Rushcliffe (Mr. Clarke) advanced in Committee was accepted throughout the debates I have read, and indeed was accepted in the debate on the previous amendment.

Mrs. Kellett-Bowman: Will my right hon. and learned Friend give way?

Sir G. Howe: Not at the moment. The fact remains that there is no increase in contributions being required from the employee, whereas this burden is being required of the self-employed on a discriminatory basis.

Mr. O'Malley: I am not trying to be awkward, but it is essential that the House should debate the figures accurately because that is the basis of the discussion. I gave the figure of £610 million.

Mrs. Kellett-Bowman: Where?

Mr. O'Malley: I shall break down the figure for the hon. Lady. It is reported in the Committee proceedings.

Mrs. Kellett-Bowman: What date?

Mr. O'Malley>: There is a sum of £47 million arising from opted-out married women's contributions, £83 million from other class 1 employees, £366 million from employers, £21 million from the self-employed through class 4 and nothing through class 2. In total that amounts to £517 million, to which should be added the Treasury supplement of £93 million, which gives a total of £610 million.

Mrs. Kellett-Bowman: Where is it set out?

Sir Derek Walker-Smith: On a point of order, Mr. Speaker. The Minister tells us that he has corrected certain figures which he read out at a rapid rate and says that he referred to them in Standing Committee. Some of us did not have the privilege of serving on that Committee. Would it not facilitate our comprehension of these matters if the Minister could identify the reference? Those of us who are less rapid at arithmetic than he would be able to understand the figures more easily.

Mr. Speaker: I do not think that the right hon. and learned Gentleman is strictly raising a point of order.

Mr. O'Malley: For the convenience of the House, may I point out that the figures are to be found in the Government Actuary's report? I cannot give the page on which the figures are to be found.

Mrs. Kellett-Bowman: They were not given in Committee.

Mr. O'Malley: I gave the figures in Committee.

Sir G. Howe: The Minister has succeeded in creating a huge cloud of confusion. He said that he was reminding me—incidentally with his customary courtesy—of figures which he had given in Committee. My hon. Friend the Member for Rushcliffe has no recollection of those figures having been given. Will the Minister be kind enough to give the House the reference as to where those figures are to be found in the Committee proceedings?

Mr. O'Malley: They are in the Government Actuary's report. [Interruption.] I am not trying to hide anything from the House. I used those figures in Committee. If I did not do so, I apologise to the House. They are set out in the Government Actuary's report.

Sir G. Howe: May I ask the Minister to say where in the Government Actuary's report the figures are set out, and with what he is comparing the figures? I thought that the figures which I was quoting were common ground between us.

Mr. O'Malley: May I seek the help of the House? I was right in believing that I had given these figures in Committee. Hon. Members will see them set


out in the Fourth Sitting, on Tuesday, 19th November in the afternoon in columns 155 and 156.

Sir G. Howe: Perhaps we may now have an opportunity of studying them together. If right hon. and hon. Members will talk amongst themselves for a few moments, I will look at the comparison which the Minister is making.

6.30 p.m.

Mr. David Mitchell: While my right hon. and learned Friend is examining the figures, perhaps the Minister will clarify the situation on one other matter. He said just now that it was wrong to suggest that the employee did not have to pay any increase in his contribution. I am not sure whether the Minister intended to say that, because what my hon. Friend the Member for Rushcliffe (Mr. Clarke) said was almost a verbatim quotation from the hon. Gentleman's Second Reading speech. Perhaps the hon. Gentleman will be prepared to reconsider his remarks while my right hon. and learned Friend is giving way to me.

Sir G. Howe: That interruption was rather more confused than I expected. My hon. Friend the Member for Basingstoke (Mr. Mitchell) raises a perfectly valid point, but it is not one for me. No doubt the Minister will apply his mind to answering the question in due course.
The figures to which the Minister has now referred take account of the changes in earnings and in earning rates—all the changes made together. But ours are the figures making a constant comparison, and they do not conceal the fact that the self-employed are being required to pay a sharp increase in contributions when employees are finding that almost throughout the whole range their contributions are being reduced. Only about 2 million self-employed face this large increase, whereas 18 million employees face a totally different picture.
I refer to what the Minister said on Second Reading. At that time he was taking credit for the reductions in contributions payable by employed people and singing the praises of that proposal, although the reductions are taking place because of the abolition of the second pension scheme, in substance.
On 6th November, the Minister said:
All male employees up to well above £60 a week who are not contracted out will pay reduced contributions. I will take it at the top of the range, because there are reductions all the way lower down. Even a man on £62 a week not contracted out will pay 24p less a week than under the existing arrangements. Even at the ceiling of the scheme—that is, roughly one and a half times national average earnings at the appropriate date—the employee not contracted out will be faced with an increase of only 13p a week. So throughout the whole of the range with the exception of those at the very top there will be reductions for those who are not contracted out."—[OFFICIAL REPORT, 6th November 1974; Vol. 880, c. 1115–16.]
That is the picture that the self-employed person sees. He sees the impact of what the Minister is taking credit for— a reduction right across the board in the burden on the employed person. We must not forget that many employed persons will be people to whom he is paying wages and in respect of whom he will pay higher employer's contributions. At the same time, alongside that reduction, he sees for himself this large and sharply increased additional burden.
This is a fantastic insight into the Government's lack of sensitivity. It adds enormously to the sense of injustice felt by the self-employed who will face a new world from next April. They are more aware than ever before that they do not get many benefits which are available to employed people. They do not get unemployment pay, redundancy pay, industrial injury benefit and earnings-related supplement. It may be that the Minister, applying his actuarial mathematical mind, can explain that this is rational and justifiable and that self-employed people should not feel a sense of injustice about this when their contributions are going up. But they do, and it is compounding folly to increase that sense of injustice by adding to their burden.
There are other burdens on the self-employed, some of which they share with employees, such as higher taxes under this Government. But many smaller self-employed people smart from the fact that they have received no help from the recent Budget. They face much higher rates on their business premises. To find this additional contribution not deductible from tax is the last straw which will break the backs of many self-employed camels. They regard it as a tax. It is beside the


point to make comparisons between the total size of the class 1 contribution, employee and employer, and the total self-employed contribution——

Mr. George Cunningham: Nonsense.

Sir G. Howe: The employer's share of the class 1 contribution has gone up, and the employer's share can be set against tax, unlike the employee's part of it.
It may be that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) interrupted at an ill-judged time. In Committee, he himself made a point which he conceded was helpful to our case. On Tuesday 19th November he pointed out—and it was a telling point—that the Treasury made a very substantial contribution to the total being deducted from the employer. The hon. Gentleman estimated that about 61 per cent. of the input into the National Insurance Fund by the employer was contributed by the Treasury. But of the share paid by the self-employed to the fund only 15 per cent. was contributed by the Treasury. The self-employed have to find most of it out of taxed income, whereas the employer may offset it against tax and collect a great deal of it from the Treasury. The self-employed know that, and it adds to their sense of injustice.
The effect of what is being done is to threaten with extinction—certainly with great hardship—many small individual, independent enterprises which provide in most communities services which are irreplaceable. They are convenient to the community, to the family and to the housewife. I have in mind small shops and service establishments which employ between them about 6 million people and which produce between one-fifth and a quarter of the nation's wealth. These are the people who feel themselves discriminated against in this way.
One effect is to drive out of these sectors people who previously have been rendering good service to the community. I quote from a letter I received which makes the point:
… last week my wife required the services of a plumber. Of the two that she phoned, the first one stated that because of the proposed changes in the Self Employed Stamp he had given up his work and had now got a job as a supervisor with some firm. The

second plumber who had been a plumber for 25 years accepted the job but stated he was giving up his job for favour of working in some other trade as an employee and he may continue his plumbing as a part time job at weekends. This again was because of the increased stamp which he would have to pay.
It should be obvious to Government that not only are they driving thousands of such tradesmen who are such an important part of the community out of business, but they will also lose a great deal of revenue from taxes. It is a well known fact that despite reports to the contrary, the average self employed person pays more tax than he should, but when people are driven to do jobs of work on a part time basis (such as the plumber of 25 years standing) they are not going to declare these earnings to internal revenue.
This amounts to compulsory moonlighting and certainly a reduction in services available to the rest of the community. These measures are regarded as singling out a group of people who work probably harder than any other group or class in the community. Many have said to me that if all the rest of the community worked as consistently and energetically as the self-employed—motivated, of course, by their concern for their own enterprises—probably we should not be facing an economic crisis at all.
The self-employed regard these proposals as a cynical illustration of the way in which the social contract works. It is all very well Mr. Jack Jones—I have no doubt with sincerity—calling for one term in the social contract to be an improvement in pension provision. That is understandable. He is a party to the contract. But his members will pay less and not more. It is only those who are not organised—the self-employed, who are not able to resort to industrial action—who appear in this Bill to have been singled out in this vindictive way. They feel strongly and bitterly about it.
There are many groups which could be quoted as examples. I mentioned the position of the farming community in some respects because this is important not only as it was in our last debate to hon. Members from Scotland, Wales and the rest of the United Kingdom, but also to those Welsh Nationalist Members who for some reason which I cannot understand voted with the Government at the end of our last debate. I hope that they will give us their support this evening.
The three farmers' unions of the United Kingdom are urging changes in this tax. They point out that it is a


substantial burden on the 280,000 self-employed persons in the agriculture industry. In particular, they say that by basing contributions for the self-employed on Schedule D income, the self-employed is compelled to contribute not only on the return for his labour and management, but on the return on his capital investment. The inequity is particularly serious in agriculture. It seems that this is as serious on the other side of Offa's Dyke and the other side of Hadrian's Wall as in constituencies held by the Liberal Party.

Mr. Beith: May I ask the right hon. and learned Gentleman not to refer to large parts of my constituency as being on the other side of Hadrian's Wall in that curious way?

Sir G. Howe: I was not seeking to identify the hon. Gentleman with the north of Hadrian's Wall.

Mr. Beith: Scotland.

Sir G. Howe: I follow the hon. Gentleman's point. I think that he is on the right side of this argument, whichever side of Hadrian's Wall he straddles.
That is not the only example. Another example which has cased wide concern outside the House is the effect of this tax on the creative professions. I have received many letters from writers, authors and musicians. The Society of Authors has made express representations about this proposal. It states:
The Society's Committee of Management holds the view that while authors, like other self-employed people, should not be exempted from supporting a scheme that will increase pensions and other benefits and so bring aid to those most at the mercy of inflation, none the less the new scheme will operate most unjustly in the way that it is to be applied … Much of the justice that the Government will achieve through the introduction of Public Lending Right … will be cancelled out by this new tax and by the deprivation of benefits which others are to be allowed to enjoy.
The Incorporated Society of Musicians makes similar points. It points out that at least half of our professional musicians are self-employed, whether performers or teachers of music. It also makes the point:
It is significant that the group chosen to be subjected to this financial penalty is the one group in the country that cannot strike … We would only add that we have

the impression that we are being regarded as part of the 'lump'—a so-called band of buccaneering tax dodgers. The truth is that, like most artists, musicians have been individually subsidising the arts in this country by accepting poor rewards and conditions of employment for which a term like 'unsocial hours' is pitifully inadequate.
Where has the Minister with responsibility for the arts been throughout the Government's consideration of this subject?
Surely, for all these reasons, the Government's task is to move with understanding and sensitivity when making changes of this kind. But they are moving in the opposite way in this instance. They have singled out and are seen to have singled out for this discriminatory burden a group of people whose loyalty and service to the community are outstanding and whose contribution to the fabric of the nation's life—the life of each community in the nation as well as the country as a whole—is unique and indispensable.
The Government have presented these people with a provocative, harsh and unnecessary shock. The introduction of earnings-related contributions was, at the very least, bound to come as a surprise. To have compounded that prospect in this way is wholly without justification. No wonder we are finding to our regret, but not to our surprise, calls up and down the country by people suggesting that the self-employed should not pay these contributions when the time comes. The House knows that that kind of response is uncharacteristic of the self-employed— a group of people who are being obliged by the Government's approach to this matter to invoke the name of Poujade and to contemplate forms of protest which are unnecessary, or ought to be unnecessary, at a time of stress in our society.
A Government of sensibility concerning themselves with this subject would recognise even now that they had made a serious mistake in pressing ahead with these proposals unrepentant and without making a single change from last summer until this debate. I call upon the Minister to recognise that he has made a mistake, to recognise the extent to which public opinion is against him, and to make himself into a figure demanding, for the moment at least, public acclaim by indicating that he will accept the amendment.

6.45 p.m.

Sir John Eden: It is easy to talk in terms of bands, categories, and other impersonal groups without realising that decisions that affect individuals are changing the livelihoods of countless homes and family businesses.
I hope that the Minister will be able to respond to the invitation from my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). I am sure that what my right hon. and learned Friend said will have struck a chord not only with my hon. Friends and others who sit on this side of the House but with many who habitually fill the benches behind the Minister. I cannot believe that the action the Government are proposing relating to the self-employed would command support throughout the Labour Party. I am sure that large numbers of hon. Gentlemen who normally sit on the benches opposite will have had representations, just as we have, from constituents, people who run small businesses, people who work for themselves, whether professionally or otherwise, who will be adversely affected and damagingly hit by these proposals. I wonder, as I look at the empty rows of benches opposite, where hon. Gentlemen who would normally be in the forefront of speaking up for their constituents' interests in a matter of this kind can be. I know that they must feel just as strongly as we do about these matters.
The people to whom I have referred will be hit by a very sharp increase in contributions. It is, as I said, easy to overlook the individual situation when talking in broad terminology about categories, bands or groups.

Mr. George Cunningham: Mr. George Cunningham rose——

Sir J. Eden: I hope that the Minister will now apply his mind to the individual situation which must exist in his constituency, will draw in his mind's eye the image of the people who live down the road from him, and will ask himself how these people will be affected and whether he is justified in inflicting this degree of damage on them. I will give way to the hon. Gentleman now.

Mr. George Cunningham: Does the right hon. Gentleman accept that the increased rate of contribution being asked

from the self-employed is no more than is required to pay for the benefits they will receive and have in the past been receiving? Does he accept that that is arithmetically correct?

Sir J. Eden: The hon. Gentleman must completely misunderstand the point that we are trying to make and has been strongly represented from all over the country as a result of these proposals. The hon. Gentleman does not understand the human reaction. He can bring out his slide rules and work out all the arithmetical formulae that he likes, but the damage is being done to individual citizens—people of enterprise who participate in the life of the communities in which they live and contribute substantially to the well-being of this country. It is their spirit as well as their pockets which is being damaged by proposals of this kind.

Mr. George Cunningham: Of course, I accept that, but if the contribution being asked from the self-employed is less than is arithmetically required to pay for the benefits that they receive, that can only happen if other groups—principally the employed—pay more than is arithmetically required. The same human considerations as the right hon. Gentleman has just invoked for the self-employed apply to other categories. Will he address himself to that argument?

Sir J. Eden: The hon. Member should concern himself more with the substantial increase in contribution which this category is being called upon to pay. It is a selective attack on the self-employed and appears to be deliberate. There is obviously every defence which can be mounted and justification which can and, no doubt, will be made by the Government, but is it the Minister's intention deliberately to damage these people? If so, they stand condemned. If it is not the case, they still have the chance to correct this error.
This additional imposte should not be seen, as my right hon. and learned Friend said, in isolation from the other tax changes which this Government have made and which will have so adverse an effect on the self-employed, and especially the small businesses, about whom we are talking in the main. The tax changes have already caused sufficient concern


among them, and have already done damage enough by undermining the confidence of many of these people. If one takes into account things like the capital transfer tax, which will have a wicked effect on small businesses, and the other tax proposals in the Chancellor's last Budget, one can see that these people are being cumulatively singled out for a substantial tax increase. They see this as an act of vindictiveness by the Government.
Is it the deliberate policy of the Government to try to damage the interests and enterprise of the self-employed? Does the Minister realise that this proposal will inflict grotesque damage not on groups, bands or categories but on millions of individual citizens, the great majority of whom contribute substantially to the well-being and the life blood of this country? If it is not a deliberate action, then let him withdraw the original proposals and bring forward fresh ones.

Mr. Raphael Tuck: I am sure that the view of the right hon. Member for Bournemouth, West (Sir J. Eden) that this proposal is vindictiveness is misplaced. I am sure, knowing the Minister, that he is not vindictive. Unfortunately, however, I find myself very much in agreement with much of what has been said by the right hon. and learned Member for Surrey, East (Sir G. Howe). I am very unhappy about the Bill and have come to the House to say so. I will probably incur the wrath of many of my right hon. and hon. Friends, but one has to live with oneself, and I must voice my opinion.
However, this criticism comes a little ill from the right hon. and learned Gentleman. I agree with much of what he said, but the Conservative Government laid the groundwork for this Bill and he is now coming here with a halo around his head, instead of in the guise of Mephistopheles, accusing us of doing what he and his party would have done.

Mrs. Kellett-Bowman: Would the hon. Gentleman accept that it is a vastly different kettle of fish now that the Government are seeking to raise the proportion from 5 per cent. to 8 per cent.? That alters the whole picture.

Mr. Tuck: But the whole point that the hon. Lady misses is that, unless the

Conservative Government had refused to increase pensions, they would have had to increase the flat-rate contribution by the self-employed from £2·41 to £2·70 or they would have had to push up the rate to 8 per cent. What else would they have done? I disagree with this method of doing it, but the Conservative Government have laid the groundwork and left my right hon. Friend to sort the problem out.
The right hon. and learned Gentleman reminds me of the maid in domestic service who told her mistress that she would have to leave because she was going to have a baby. The mistress said "I will keep both you and the baby because I like your work so much." This happened four times, until the mistress was keeping the maid and four babies. Finally the maid said that she would definitely have to leave, because she could not stand a place with so many children. That is exactly how the right hon. and learned Gentleman is behaving. He would have done the same himself—[HON. MEMBERS: "No."] He has not said what he would have done.

Sir Geoffrey Howe: I do not want to avoid this point; indeed, I said so in my speech. In Standing Committee we moved amendments embodying two other methods—either an increase of ¼ per cent. in the contribution from the employed person, which would have raised much more, I think £83 million; or, as the hon. Gentleman himself suggested, an increase in the flat-rate contribution from £2·41 to £2·70 for the self-employed. Either of those or a combination would help to raise this sum in a better way than that to which the hon. Member objects—namely, bouncing up the rate from 5 per cent. to 8 per cent.

Mr. Tuck: If the Conservatives had raised the rate from £2·41 to £2·70, that would have been an increased burden also for the self-employed and the situation would not have been ameliorated.
However, I agree with much of what the right hon. and learned Gentleman has said. In this case, more by accident than by design, we are penalising the self-employed. I know that the Minister will say that probably one-third to two-thirds of the self-employed are excluded altogether, and that those in the higher


bracket can afford to pay, but on earnings exceeding £1,600 per annum an amount representing 8 per cent. up to a maximum of £3,600 must be paid as nothing more nor less than a tax, with no tax relief.
In other words, to generate this 8 per cent. the self-employed person will have to earn these amounts plus the tax that he or she normally pays under Schedule D. To take an example, if a self-employed man were paying 8 per cent. of the difference between £1,600 and £3,600, the amount that he would have to pay is £160 and to make that amount before tax he would have to earn an extra £238. This compulsory payment is illogical and unjust. An extra contribution will be paid on an earnings-related benefit without eligibility for the earnings-related pension fund which most employed people enjoy. The Minister has, I think, admitted that the self-employed are excluded from unemployment benefit, from industrial injury benefit, from earnings-related supplements to sickness benefit, and from widow's benefit. This is a tax on people who already find acute difficutly in making ends meet.
I am not concerned about the one-third to two-thirds who are excluded altogether, nor about those earning more than £3,600. What I cannot understand, however, assuming that the 8 per cent. is essential, is why it has to be put on those receiving £1,600 to £3,600. Let us put it on those receiving between £4,000 and £6,000 by all means. If we did that we would save those who are in difficutly in making ends meet.

7.0 p.m.

The EEC regulations on social security apply to nationals of the United Kingdom and other Community countries, and to Stateless persons and refugees who are permanently resident in the United Kingdom and who work for an employer in the United Kingdom. They also apply to national insurance retirement pensioners or widow beneficiaries and their dependants. The regulations do not apply to those who are self-employed or who are not employed. This is very unjust. Again, these people are not getting what employed people normally receive.

Mr. George Cunningham: What proportion of all the benefits paid out by

the National Insurance Fund do the self-employed not get, in terms of percentage of expenditure?

Mr. Tuck: I am sorry, but I could not give the figures without looking into them.

Mr. George Cunningham: But it is crucial. That is the only point that matters.

Mr. Tuck: I cannot give the figures. I do not have them.

Mr. Patrick Cormack: Carry on. The hon. Member is trying to trip up the hon. Member for Watford (Mr. Tuck).

Mr. Tuck: The self-employed doing business in another EEC country will be compelled to pay for private medical and hospital treatment or to take out a private insurance policy before going abroad. This sets the self-employed below the employed or the Stateless person or refugee whose residence in Britain may have been very short and whose contribution to the National Health Service and the life of the United Kingdom may have been relatively microscopic.
It works injustice even between self-employed people. One person may have just reached the £1,600 level. He does not pay any percentage except the £2·41 a week. He pays that at 8 per cent. Another person may have reached the £3,600 level. He will be paying out more in contributions than the person on the £1,600 level, but when they are eligible for benefit they will get exactly the same benefit.
Why can we not have earnings-related contributions and earnings-related benefits? That would be an entirely just system.

Mr. O'Malley: At this stage of my hon. Friend's speech, he is speaking sensibly. Successive Governments would have preferred to have been able to introduce a fully earnings-related system of contributions in respect of the self-employed. It is because of the differences between Schedule D and Schedule E that that has never been found possible. The reasons were set out in detail in the 1969 White Paper which the late Richard Crossman put forward. During discussions in Committee on the Bill that became the Social Security Act 1973, the


right hon. Member for Leeds, North-East (Sir K. Joseph) made it clear that he would have preferred such a system. The problems so far have proved insurmountable. That is why we have the unsatisfactory hybrid that has been left behind by the Social Security Act 1973.

Mr. Tuck: I am glad that my hon. Friend has called it an "unsatisfactory hybrid". He will correct me if I am wrong, but I think he will agree that it still means that the poorest of the self-employed will pay a higher proportion of their net earnings in contributions than that paid by the better off. A self-employed man with earnings of £25 a week will pay 9½ per cent. of his earnings in contributions compared with the payment of 8 per cent. on earnings of £50 a week or more.

Mr. O'Malley: As a man or woman who is self-employed and earning below £1,600 a year—a very low income—could be paying a contribution rate of 15 per cent. or more, does not my hon. Friend think that it would be better to show consideration for those people, as I have shown it in jigging the formula, rather than concern for people earning £3,600 and paying not 15 per cent. but 8 per cent.?

Mr. Tuck: I appreciate that, but it is the people earning £1,600 and £2,500 about whom I am concerned—for example, the authors and writers who are just getting by. They will have this extra burden placed upon them.
I appreciate the fact that my hon. Friend has not done this through any malice whatever and that this is being forced upon him, but I ask him to review this matter in the coming year and to see whether we can evolve a system whereby we have earnings-related contributions and earnings-related benefits.
The level of earnings below which a person liable for class 2 contributions may seek exemption from liability is set at £675 a year. On earnings of below £675 a man or woman does not pay the £2·41 a week, which is about £125 a year. This seems to be absolutely mad. If one is earning £674 one does not pay that £125, but if one is earning £675, £1 more, one has to pay the £125. Therefore, this means that when earning between £675 and £800 one's net earnings are less than one would receive if one earned only £674.

For example, let us suppose that a man is earning £750. He is earning £76 more than the £674 but he has to pay £125. In reality, therefore, he is receiving £49 less than he would be receiving if he kept his earnings at £674.
I do not know whether I have made myself clear. I think that that is correct. It is absolutely mad. If I were not in Parliament, I would say that it was bloody mad, but as I am in Parliament I cannot say that.

Mr. Deputy Speaker (Sir Myer Galpern): Order. The hon. Member has in fact said it.

Mr. Tuck: I have said, Mr. Deputy Speaker, what I would say if I were not in Parliament.
This is a perfectly mad part of the Bill. My hon. Friend the Minister of State will have to do some answering for it. The worst of it is that I do not want my Government to fall, and, therefore, I have got to go into the Lobby to vote for what I consider——

Mr. Cormack: Shame.

Mr. Tuck: It is not shame at all. It is a question of alternatives. It is a question whether I want my Government to fall or whether I want to vote against the Bill.

Mr. McCrindle: May I give the hon. Gentleman a little advice? When I found myself in a distinctly similar position on a matter involving social security, when the Conservative Government were in power, having made against my Government a speech not dissimilar from that which the hon. Gentleman has been making against his Government, I carried the matter through and voted with the then Opposition.

Mr. Tuck: The hon. Gentleman's Government had a large majority. This is a question whether the present Government may fall. Therefore, I find myself in the impossible position of having to go into the Lobby to vote for what I consider to be a mad Bill.

Sir Geoffrey Howe: I should like to reassure the hon. Gentleman and to tell him that although this is a matter of great importance and a matter on which we wish to see the Government change


their minds—and we are grateful for his help in persuading them in that direction—it does not immediately occur to one that this is a matter on which the Prime Minister, even with his sense of bravado, is likely to demand a Dissolution. I think that the hon. Gentleman may rest fairly sure of that and join us on the merits of the argument in order to secure a sensible majority.

Mr. Tuck: I am not the keeper of the Prime Minister's conscience.

Mrs. Kellett-Bowman: He has not got one.

Mr. Tuck: That is a matter of opinion for the hon. Lady, but I cannot state categorically whether the Prime Minister would resign if the Government were defeated. I am concerned to see that the Government are not defeated. Therefore, I must vote for what I consider to be a mad Bill. This again illustrates our mad system. Perhaps we ought to shut up shop or give the government of this country over to its women. They would make a far better job of it than we have done. At least, they could not make a worse job of it.

Mr. Charles Morrison: I cannot claim that the hon. Member for Watford (Mr. Tuck) has damned the Government's proposal with faint praise. He has just damned it. His closing remarks gave one cause for shock. It is because of the attitude he proposes to adopt that the public has increased its cynicism about Parliament. Unless people are prepared to make their vote follow their voices, it is not in the least surprising that the general public should steadily lose confidence in Parliament.
I agree wholeheartedly with the description of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) about the anger which is felt about this proposal. I have had a stream of letters on this subject. Only this morning I received a letter from a constituent who states:
I should be grateful if you would do everything in your power by both constitutional and unconstitutional means to prevent this happening, as it is bound to cause considerable hardship.
Needless to say, I shall encourage my constituent not to do anything by un-

constitutional means, but that letter is typical of many that I have received and it demonstrates how strongly people feel about this extremely harsh and unjust proposal.
It is clear that the Labour Government do not consider that the self-employed are useful people. It is clear that in the view of this Government the self-employed will not be useful until they are employed. It is likely that this Government will consider that the self-employed are not really useful until they are employed by the State. It seems that this Government will not be happy until they have destroyed the smaller farmers and the small shopkeepers.

Mr. George Cunningham: Come off it.

Mr. Morrison: That is what could happen if the Government continued to impose retribution on self-employed people in this way. How would the hon. Gentleman like to be a small farmer in Wales or somewhere on the west coast of England or of Scotland this year, with very limited feeding stuff for his cattle, knowing that he must live on an extremely limited income and that he will now have this sword of Damocles brought to hang over his head? This is the type of proposal which will ultimately bring people who are self-employed into a state of revolt.
It is clear that this Government think that the self-employed are unacceptable. Because of that, these people will react very strongly. I greatly regret that the Government have seen fit yet again to extinguish what my right hon and learned Friend called "independent enterprise". The only good thing which can be said about this proposal is that it is one of the earlier nails in this Government's coffin.

7.15 p.m.

Mr. George Cunningham: Service in the House of Commons is something of an education. One of the first lessons that I recall receiving here was a remark by one of my hon. Friends soon after I arrived here when he said words to the effect, "Anyone who thinks that in this place one can convince another Member of a point by rational argument has another think coming." That has been my experience ever since.
However, we must endeavour to put rational cases and to identify the greatest possible agreement upon points of fact involved in any decision which we are taking. I say with respect to my hon. Friend the Member for Watford (Mr. Tuck) that he has not, apparently, discovered some of the essential facts which one must have in one's head if one is to reach any conclusion—right or wrong— on this matter.
We should consider this very seriously, because of the very strong feeling which large sections of the general public have about it. We have all received irate letters from various groups of self-employed people about what they regard as the clobbering, the crucifixion, the imposition that is being put upon them.
The fact that those people regard it as such, though important and worthy of mention, is not the basic point. The question is whether it is justified. If the anger is not justified, we cannot just sweep it aside and ignore it. Our first job, however, is to find out whether these people are right in their appreciation of the facts. Therefore, one should endeavour to address oneself objectively to the arguments that are put on the other side from oneself.
Some arguments which were adduced on Second Reading and in Standing Committee do not wash. I illustrate this with the point which was just made by the hon. Member for Devizes (Mr. Morrison) in relation to farmers. I think that there is a very valid point involved in the objection from one group of farmers who wrote to us saying that the profits of a small farmer in particular represent not only the return on his labour but also profit on investment and that, therefore, though he certainly should be taxed on that, because we are all taxed on that sort of thing, it was questionable whether it was right that he should be made to pay a national insurance contribution on that because others did not have to.
That is a rational point, which we can consider calmly without hysteria. Then it might be found that there was a chance of changing propositions, now or on another occasion, because one would have isolated an area upon which one could get dispassionate agreement. One thing that is certain is that British far-

mers cannot be saved from all the difficulties with which they are confronted merely by our reducing their national insurance contributions. Their difficulties are far too great to be affected much one way or the other by either an increase or a decrease in contributions.

Mr. Cyril Smith: The hon. Gentleman is talking nonsense.

Mr. Cunningham: I must bow to the hon. Member for Rochdale (Mr. Smith) for his calm approach to matters. However, I believe that if one were trying to save the farming community one would be trying to inject into farmers' finance something rather greater than the sum proposed to be saved by the amendment.

Mr. Cyril Smith: The hon. Gentleman is still a silly ass.

Mr. Cormack: The hon. Gentleman spoke about logic. He has just uttered the greatest perversion of logic there ever was. The amendment would at least help the farmers somewhat.

Mr. Cunningham: I am coming to the question of how much self-employed people in general should pay. I suggest that one is not assisted to reach a sensible decision on the point by suggestions which have been made, not only in this debate, but also in Standing Committee, that somehow the whole problem of the little man in a plumbing business, for example, or of the small farmer, can be solved by anything which is done on the national insurance side. What such a man should contribute in national insurance contributions stands in its own right.

Mr. Charles Morrison: It is not just the national insurance contribution. It is also the fact that increasing charges for this, that and the other—for rates, for taxation and for various commodities—have come one on top of the other. These are the things which are getting the self-employed man down.

Mr. Cunningham: I understand that. But I hope that the hon. Gentleman will take the point that on Second Reading a number of us said that although an employed person was being invited or compelled by the Bill to pay considerably more than he paid in the past, he enjoyed—I think this is undeniable—in the sphere of taxes, certain opportunities for reducing


his tax burden which employed people, on the whole, do not possess. Some hon. Members of the Opposition rightly came back at us and said that if there was something wrong with the tax system it should be changed, but that it could not be expected to balance an error in the tax system which was in favour of the self-employed by an error in the national insurance contribution which was detrimental to the self-employed. We cannot have that argument both ways.
We should look at the national insurance contributions in their own right as a separate matter and see what each category should contribute to the fund. I address my remarks particularly to my hon. Friend the Member for Watford, who obviously has an open mind on this matter. The basic fact from which we all must start is, as the Minister has said on many occasions, that the benefits to which self-employed people are entitled— principally the retirement pension—constitute approximately 90 per cent. of the outgoings of the National Insurance Fund. If my hon. Friend is not willing to take the Minister's word on this he has only to look at the well-publicised figures.
We all know that the pension to which a self-employed person is entitled, which is the same as that to which an employed person is entitled, constitutes far and away the biggest expenditure from the National Insurance Fund. During 1974, for example, expenditure on the retirement pension is expected to constitute 71½ per cent. of the outgoings from the fund. There are other smaller benefits, some, or perhaps most, of which I believe the self-employed person is entitled to——

Mrs. Kellett-Bowman: Such as?

Mr. Cunningham: I could read down the whole list. But if the hon. Lady would look at the proceedings of the Standing Committee she would find the matter all set out there. I am not prepared to interrupt what I am trying to put forward as a reasonable argument in order to refer the hon. Lady to proceedings which she ought to have read——

Mrs. Kellett-Bowman: I have.

Sir Raymond Gower: Even accepting what the hon. Gentleman says, may I ask him whether he acknowledges

that some valuable and useful benefits which other contributors enjoy are not payable to the self-employed? Is it not reasonable that under such conditions the self-employed resent the fact that they should be clobbered in this way?

Mr. Cunningham: The self-employed are not entitled to some contributions, but we will not go into the reasons for this now. The question is, what percentage does the cost of the contributions bear to the total of benefits from the fund? There is no disagreement between the two Front Benches on this. Both accept the actuarial calculations, which anyone can check prima facie from the published figures, that the benefits to which self-employed people are not entitled amount to about 10 per cent. of the outgoings from the fund. It is no part of the Opposition case to question that figure. I think I see the hon. Member for Rush-cliffe (Mr. Clarke) nodding his head. He accepts the figure.
Let us start from the point that the self-employed person, although not entitled to some benefits, is entitled to benefits which in value constitute 90 per cent. of the outgoings of the National Insurance Fund. If that is not true hon. Members must argue that it is not true, or at least assert their questioning of it. But on the face of it it is extremely likely to be true, even if one merely glances at the figures——

Mr. Raphael Tuck: It seems to me that it is not possible to run the world by mathematics. The point we are debating here is not really concerned with mathematics. If we ran the world by mathematics no one who did not pay for medical aid would be entitled to the benefits of the National Health Service. The question we must ask is whether a particular measure is unduly harsh on a certain section of the community. It is my view that it is harsh and unjust on a small section of the community, and that is why it should be reviewed.

Mr. Cunningham: I hope that my hon. Friend will follow me through my argument, which I shall make in my own way, and at the end he can see whether he is still of the same opinion, as I think he will be.
If it is true that the benefits to which the self-employed are entitled constitute


90 per cent. of the outgoings of the fund, the starting position would be that a self-employed person would pay, either by himself or through someone else, contributions amounting to 90 per cent. of those contributed by other people. But as has been pointed out, the self-employed have never been asked to do that. That has always been regarded as too harsh.
The Minister has said that from the beginning of the scheme the most that a self-employed person was asked to pay was a contribution equal to 70 per cent. of the total paid by employers and employees. I am prepared to say that that was wrong and that the correct method would have been to make a self-employed person pay 90 per cent., which reflects the benefits he receives. If this is not done a self-employed person is being subsidised not by the Government, by way of general taxation revenue, but by other categories of contributors to the National Insurance Fund. If some hon. Members are inclined to disagree with that proposition I am prepared to say that I do not think that either Front Bench would disagree with it. If a self-employed person contributes less than the actuarial equivalent of the benefit he receives he must therefore be in a position of being subsidised by the other categories of contributors to the fund.

Mr. Kenneth Clarke: The hon. Gentleman sounds as if he is going to make 90 per cent. the valid comparison. I know that he accepts that as the self-employed do not get tax relief on their contributions in the way that an employer does under the present arrangement, 90 per cent. is in no way a valid starting point. Does he accept, however, that a valid starting point is that successive Governments have allowed the self-employed contribution to fall to 40 per cent. or thereabouts in the total class 1 contribution? That is another valid starting point. The hon. Gentleman cannot be suggesting a dramatic change from 40 per cent. to 70 per cent. or to 90 per cent., which he keeps using in his argument.

Mr. Cunningham: The hon. Gentleman knows perfectly well that I accept both those points. I have the impression that I have been labouring hard to get the Opposition to elaborate on these points instead of creating the fiction that we are clobbering the self-employed in mak-

ing them pay something which will be drawn off for the benefit of other people.
The normal contribution of a self-employed person, if we are starting from scratch—which we never are—is that he would have to pay approximately 90 per cent. of the value of employee and employer contributions added together. That would be wholly unjustified. I agree that there is a gross differential between the manner in which the employer pays his contribution and the manner in which the self-employed persons pays his. One is subject to tax relief and the other is not. I admit that this was done by a Labour Government in 1965. I do not think that at the time it had the same consequences, from a money point of view, that it has today and at the time the Labour Government gave a quid pro quo involving the withdrawal of tax relief, which is now woefully inadequate.
I have said previously that I regret the change that was made in 1965. I think that, given the much higher contributions which all contributors will now be asked to pay, it is time to reconsider giving tax relief on all those contributions—at least on that part of the self-employed person's contribution which exceeds the contribution of an employee, because the employee does not get tax relief. Therefore, the self-employed person should not get tax relief on the notional equivalent of the employee's contribution but should get tax relief on the notional equivalent of the employer's contribution.

7.30 p.m.

I shall not go over the arguments which I mounted at excessive length in Committee, but I will state the conclusions. I conclude that the net amount which the Government are asking the self-employed person to pay is about right but that net amount should be applied to the self-employed person by getting from him the gross amount—12½ per cent. of his earnings—and then he should get the tax relief. In that way the input into the National Insurance Fund would be much higher than it is now and the Treasury would lose some of its tax revenue. Because the National Insurance Fund would go into actuarial surplus, all the contributions could be brought down by a fraction.

At the moment the self-employed person is being subsidised, but subsidised by employees. He ought to be subsidised, as the employee is, by the Exchequer. I stand by the percentage quoted by the right hon. and learned Member for Surrey, East (Sir G. Howe), which he quoted from my speech on Second Reading, and this has to be looked at now in the Finance Bill context in order to give tax relief for part of the contribution of the self-employed person.

Mr. Kenneth Clarke: Is the hon. Gentleman not aware that he sounds rather like his hon. Friend the Member for Watford (Mr. Tuck) except that he concedes, for his own reasons, part of the validity of our case? He particularly states the case of tax relief. He says that rather than support our amendment, which would give relief to the self-employed, he looks for help to the Finance Bill when he knows very well that no such help will be forthcoming in this year's Finance Bill. Therefore, does he not accept that however imperfect he thinks the vehicle we have chosen, as he accepts so much of our case it would not be valid to do what the hon. Member for Watford would do?

Mr. Cunningham: It is not the case that, because the Government do not want it, it should not happen. The Government get what we give them. The difference between my hon. Friend the Member for Watford and myself is that I am saying that the self-employed person is bearing a burden which is right in net terms. What is wrong is that he is being subsidised from the wrong quarter—from employed people instead of from the Exchequer. Because I argue that he is bearing the correct net burden, I think it is right for the Bill to proceed. If, as a result of all these matters taken together, he was bearing an excessive net burden I would either vote for the Opposition or, more likely, table an amendment of my own.
The Opposition can rightly argue that the reversal of engines has been sharp. Over the years we have allowed the contribution of the self-employed person to fall further and further below the value of the actuarial benefits which he receives. People are entitled to say, "You ought not to reverse engines too suddenly in order to impose a sudden harder burden,

even though it is perfectly justified." As I have said before, I am prepared to accept that for reasons which I have already stated. It is a respectable argument to mount against the Government's proposals.
I take my hon. Friend's point that because the self-employed person contributes a fixed element and a percentage element, the self-employed person at the lower end of the income range is paying a large percentage amount. We know the reasons. We have to get some money out of him before the Schedule D obligation is assessed. The weekly contribution should be seen as a payment on account so that the payment of the £2·41, or whatever it was, would then be taken as an advance payment, and that which the self-employed person would be due to pay in the end would be 8 per cent. of his assessed earnings less whatever advance payment he had made by means of his fixed amount. That would be an improvement which the Opposition do not suggest in their system and, therefore, they are not entitled to invoke it tonight, though it would be an improvement in the system if it were ever introduced.

Sir Derek Walker-Smith: I propose to be brief, first because my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), in opening with his customary clarity and cogency made an overwhelming case—what the lawyers call an open-and-shut case—in favour of this amendment. At one stage I thought he was achieving the almost impossible task of carrying conviction in a matter of reason to the breast of the hon. Member for Watford (Mr. Tuck). He carried conviction perhaps to his head but not to his feet.
The hon. Gentleman is now, I suppose, having made his admirable speech, in the position of earning the same sorrowful comment as the Morning Standard made on Sir Robert Peel in the matter of the Corn Laws: "He has convinced others. How comes it that he has failed to convince himself?" I would say to the hon. Member that there is yet time to take a more logical view of his voting intentions tonight.
Betwixt the stirrup and the ground
Mercy I asked, and mercy I found.
Within the next hour he can decide to do the constitutionally appropriate thing and join us in the Lobby, thereby not


only vindicating the political probity and judgment of this House but also assisting to put into operation that relief for which he so logically and eloquently argued on behalf of this very deserving section of the population.

Mr. Raphael Tuck: The view which I have taken so far as voting is concerned is not at all logical. If it were logical I would do what the right hon. and learned Gentleman would like me to do. But it is dictated by necessity.

Sir D. Walker-Smith: The hon. Gentleman said earlier that he was not the keeper of the Prime Minister's political conscience. Certainly nobody would wish so hard and unrewarding a task on him, but I think he must be a more vigilant and effective custodian of his own conscience. Otherwise, it may have escaped and may not be found again, at any rate for the purposes of this evening.
I am always a little diffident about these actuarial calculations. I would prefer that we approached these matters forensically. If one has to cross-examine an expert accountant, one at least has an expert by one's side to keep one straight. One thing that I find in these actuarial matters is that no sooner has one produced a set of figures which one thinks are comprehensible than someone else produces an entirely different set of figures which bear no relation to them. That happened again this afternoon. My right hon. and learned Friend produced his figures on the £150 million which he said had been taken as the basis throughout these proceedings and then the Minister produced figures totalling £600 million or so.

Mr. George Cunningham: We have the expert witness, which the right hon. and learned Gentleman's court experience would lead him to have, in the Government Actuary's report relating to this Bill. He will find in Appendix 2 the certified figures which are the basis of the assertions which I was making.

Sir D. Walker-Smith: I appreciate that. The force of my earlier remark was that the expert witness should be present at one's side to carry one along with these matters. But the relevance of that is this: my right hon. and learned Friend the Member for Surrey, East advanced figures to prove his case that there is a

lack of equity in the pattern of these contributions, and that it operates to the disadvantage of the self-employed. The figures which were later quoted and which come, as the hon. Member for Islington, South and Finsbury (Mr. Cunningham) reminds us, from the Government Actuary, do not seem to disprove that assertion in that the figure of £83 million for the employed compares with £21 million for the self-employed. That is only four times as much, whereas the overall ratio of employed to self-employed is nine to one. The figures are about 18 million to 2 million.
The first and fundamental criticism therefore is of the lack of equity, and that is aggravated by the tax treatment. Here the hon. Member for Islington, South and Finsbury is a highly expert witness because of his analysis in Standing Committee of the effect of the absence of tax relief on this matter when he produced these contrasting figures of the Treasury contribution in relation to the employed and the self-employed respectively. The hon. Member argues that we cannot be concerned with the tax position. He does that on the technical ground that this is a matter for Finance Act legislation and that here we are dealing with national insurance legislation. It is very cold comfort to the self-employed person. We have to take this matter rebus sic stanti-bus. We have to take it with the tax law as it is. If that is so, it is operating to the disadvantage of the self-employed person. He has no guarantee and, one would think that with the present administration, no expectation that his position in that regard will be improved.

Mr. Cunningham: Mr. Cunningham rose——

Sir D. Walker: I cannot give way. I said that I hoped to be brief.

Mr. Cunningham: The right hon. and learned Gentleman has misrepresented what I said.

Sir D. Walker-Smith: I have not, because it is here in HANSARD and I have to the best of my ability quoted what the hon. Member said. I am genuinely sorry not to give way, but we prolong the proceedings if we give way several times to the same hon. Member.
I want to stress, therefore, that although there are these important actuarial


considerations, basic principles are involved—and here I agree with the hon. Member for Watford—and mathematics are important mainly in so far as they affect these principles. Here the principle of the lack of equity is operating to the disadvantage of the self-employed person. There is also the principle that what is being done here is in effect a method of taxation upon the self-employed under the guise of an insurance arrangement.
Presumably this is done in the sacred name of the redistribution of wealth, though why these small self-employed people should be picked upon to have this particular doctrine applied to them I am not quite sure. If the Government wish to redistribute wealth—and it will soon be an academic question because if they remain in office there will be no wealth to redistribute or even leave as it is—let them do it honestly and openly in the Finance Bill legislation by genuine taxation. Let them not impose penalties of this inequitable sort upon a deserving and important section of the community by a side wind and device such as this.
In the course of the Standing Committee, I see, the Minister said that he resented suggestions that the Government were animated by lack of good feeling towards the self-employed. If they have any such good feeling they are very good at dissembling their love for the self-employed. The self-employed are not deceived. They resent very keenly the treatment which is being meted out and we on these benches share their resentment and will seek to give expression to it.

7.45 p.m.

Mr. David Penhaligon: I rise as someone who has long thought that the whole idea of a national insurance contribution should be scrapped, but within the context of this amendment we must discuss matters as they stand.
I rise to defend the self-employed primarily for the reason that if we introduce this arrangement it will be another form of income tax, whatever hon. Members might or might not say. It will mean that the self-employed person who makes just £1,6000 a year—that is a mere £30 a week—and who succeeds in increasing

his income by £1 will be taxed 41p out of that £1. That is a totally unacceptable rate of tax on such a low level of income.
I was horrified to hear the comment from the Opposition Front Bench that to improve the situation the Opposition wish to increase the value of the stamp to reduce the current rate. On an income of £1,600 a year—and it is the low-paid self-employed who are unfairly hit on this—it will make the situation even worse than it is. The tax rate of 41 per cent. at £1,600 a year remains unchanged up to £3,600 a year. At that rate, in the eyes of the public, we then reduce the level of income tax to 33 per cent. until around £5,000 a year when the marginal rate gets up to 41 per cent. again.
In defence of the self-employed, it must be said that much of their profits are imaginary or illusory. It is all very well to be promised that next year an allowance will be made to help the problem of the small businessman over the ever-increasing value of his stock. Every year he must fill the same number of shelves but it costs more and more to do so. It is all very well to promise to do something next year, but the small businessman desperately needs some help this year. In effect the small businessman will be charged a national insurance contribution on a capital investment. It has certainly not been suggested that it should be done in the case of the employed.
The Liberals will support the amendment because at least it reduces the marginal tax rate to 39 per cent. Why is it that the figure at which these contributions are levied stops at £3,600? It means that someone earning £3,600 a year pays 8 per cent. national insurance contributions, someone earning £7,200 pays 4 per cent., and someone earning £14,400 pays just 2 per cent. in national insurance contributions.

Mr. Alec Jones: Will the hon. Member indicate whether he is suggesting that we should lift that band from £3,600 upwards?

Mr. Penhaligon: It is perfectly clear. That is what we are proposing.
If the amendment is not passed, we shall be increasing the tax liability of the self-employed person earning just £2,000


a year by £32 a year, and that of the self-employed person earning £3,000 a year, much of it illusory, by £112 a year. That is not a satisfactory distribution of the burden of raising the money that we all agree must be raised.

Sir Raymond Gower: The hon. Member for Islington, South and Finsbury (Mr. Cunningham) argued with some skill, and I do not complain about that. But he was less than fair to his hon. Friend the Member for Watford (Mr. Tuck) in suggesting that these matters be considered solely on the basis of a mathematical calculation. That is a soulless approach. If the hon. Gentleman persists in it he is in danger of being described, even by his own colleagues, as a dessi-cated calculating machine.
The hon. Member for Watford has his heart in the right place on these matters.

Mrs. Kellett-Bowman: The hon. Gentleman does not have his feet in the right place.

Sir R. Gower: Whatever course the hon. Gentleman takes, what he said tonight was valuable. It illustrates that these matters cannot be considered in isolation.
The self-employed, an amorphous, ill-defined group of about 2 million of our fellow citizens, feel that they are in a precarious position. They have no great organisations to represent them. They are not the organised labour who a distinguished parliamentarian said 25 years ago were the people who mattered. He said that the others did not matter a tinker's cuss. I do not think that that was Labour policy then, and I hope that it is not now, but anxieties are renewed.
The hon. Gentleman complained that we suggested that the self-employed were being hammered. In fact, it is hammering to do in one fell swoop all that is proposed in the Bill, even if it is justified over a period. Those concerned would have to earn £3 a week net, and possibly nearly £5 a week gross, just to sustain the increased impost. That is a hammer blow that cannot be justified.
The self-employed are not necessarily all people of equal virtue, but they constitute an important part of our community. The country would suffer greatly if it no longer had this valuable

basis from which larger enterprise can grow. The self-employed do not fit easily into any system which those who love State organisations, State direction, would prefer. They do not fit easily into any system of social direction. To that extent, perhaps, some people are not particularly enamoured of anything that may sustain them.
The basis of the ascendancy of certain countries in Europe and elsewhere—certainly countries such as West Germany and Switzerland—has been the efforts of the smaller people and the self-employed. It would be a bad thing for this country if we introduced policies that hammered such people to the extent that we reduced their contribution to our economy.
I hope that even at this late hour the Government will have second thoughts. I have seldom discovered so much quiet anxiety and subdued anger——

Mr. Cormack: The self-employed are seething.

Sir R. Gower: The anger and anxiety that I have discovered are real. The people concerned have no social contract with anyone. Nobody asks them to enter into a social contract. It is easy to put new burdens upon them, as they cannot strike back. The previous amendment concerned married women. The Government, in apportioning the new burdens, are choosing those least able to help themselves.
Whatever the short-term rights and wrongs of the calculations, Ministers should take a long-term view of the problems. They should institute a reassessment of the contributions, which are excessive in view of the other difficulties of the self-employed.
We must not merely take the negative approach of not hurting the self-employed but must take steps to assist them to increase their contribution to the economy.

Mr. Anthony Steen: The complexity of modern life, the speed of change, the growth of urban conurbations, the size of populations, have led us to an over-concentration of centralised powers and an erroneous belief that bigger is better. Therefore, we have bigger Government


Departments, local authorities and comprehensive schools, sprawling housing estates and larger industrial units.
If all this led to greater efficiency, contentment and cost-effectiveness, large units would prove something: but they do not. Man rebels, and the unit breaks down when he is no longer treated as an individual but as a digit. When the size of organisation militates against his free expression as an individual and starts the process of de-personalisation, he rebels and turns on to society rather than into society.
This is part of the problem in Britain today. What we are witnessing is the breakdown of the large unit. Government must reverse the process, by encouraging the individual to be independent of the State and not more dependent on it. Government must encourage the smaller size of our social units.
The Bill represents a greater reliance on State beneficence and it is not good for us. I believe also that it is a disincentive to those who want to be self-reliant. Self-reliance is at the root of the smallest and oldest of all units, the family units—the right of the husband and wife to make a home and to provide for the family by their own initiative and hard work.
The amendment aims at limiting the potential damage, that of the erosion of the sacred and basic principles which I believe are the cornerstone of British society. It aims at preventing the man who wants to make a go of it on his own from being priced out of business.

8.0 p.m.

Mr. Ivan Lawrence: Whether one's concern is the breakdown of small units or the breakdown of statistical units, the cold, hard fact about the debate is that the effect of the Bill is to benefit all employees at the expense of the self-employed. That would not be bad if the self-employed were enjoying some advantages over and above those of employees. It would not be so bad if they were enjoying some of the advantages of employees. But they are not. They receive no dole, no graduated pensions, no earnings-related benefits, no widow's allowances, no redundancy payments.
It would not be so bad if the Bill promised the self-employed additional benefits, but it does not. It would not be so bad if the penalty being inflicted upon the self-employed were minimal, but it is not. The ordinary self-employed person will have to earn £5 a week more, for no benefit.
The gross injustice to the self-employed under this Government does not stop there because, as has been said by many hon. Members, these matters are cumulative— in other words, they are additional to rate increases for business premises, rate increases for domestic premises, increased income tax, increased corporation tax, higher interest rates, gift tax and the wealth tax that is about to be introduced. Even the proposals in the Budget for reducing stock valuation cannot help somebody who is self-employed in a business where the stock is less than £25,000.
On that basis, it is no wonder that the self-employed feel themselves being destroyed. I have seen Labour Members feeling sympathetic to the self-employed, whatever their conclusions may have been. I know that when the vote comes the mass of Labour Members will go into the Lobby to support their Government. I ask myself why the self-employed are being made to pay £5 a week more for no benefit when nearly everyone in the country, and particularly anyone who represents the self-employed, feels so strongly about the injustice of their position. Why are they being singled out for this affliction? Is it because they have no trade union to represent them? Is it because they cannot hit back at this Government? Is it because they are not able to blackmail the Government by stopping production and putting us back on a three-day week? Is it because by exploiting the self-employed the Government realise that the trade unions, which provide so much money for the Labour Party and sponsorship for so many Members, will not be angry?
Does not that underline the fact that the social contract is nothing but an unenforceable and useless agreement between the Government and their party supporters and paymasters? Does not that prove that the Government have lost all claim to being a party of social equality and social justice? I implore Labour Members to think again about this measure.

Mr. John Cope: It can be seen already that this measure is an integral part of the campaign which the Government have been waging against the smaller business and the self-employed. In different contexts those similar groups overlap. They were summed up by the Prime Minister in the phrase, "the useless people". At least, they were left out of the description of useful people in my understanding of the right hon. Gentlemen's words. That is part of the same campaign.
I am not sure whether the Government appreciate who these people are that they are hitting, but presumably they do. Some of them are the involuntary self-employed of my profession, namely, chartered accountants. We are obliged to be self-employed by law. There are also those who have a certain amount of choice whether they trade as individuals or as companies. A few years ago it was those who chose to trade as companies who were always thought to be trying to get out of paying tax. Earlier we heard from the hon. Member for Islington, South and Finsbury (Mr. Cunningham) that those who are self-employed, by comparison with those who are employed, enjoy advantages or are able to take advantage of opportunities. I think that that was the phrase that the hon. Gentleman used when referring to the tax system and the self-employed. I deprecate very much that implicit encouragement to those who are self-employed to take advantage of any loophole that they can find in the tax system.
The self-employed sector includes not only farmers but small shopkeepers and many clergymen. It is true that some clergymen do not come into the category of self-employed. It includes creative artists and others of artistic ability. The hon. Member for Islington, South and Finsbury said that the profits on which the basis of the calculation is made, the 8 per cent., includes returns on the investment of capital. We are grateful to the hon. Gentleman for conceding that part of our case. That is an important element, and particularly important to farmers who enjoy a low return on capital and who are in a special position.
The hon. Gentleman also conceded that part of the trouble is that we have not hastened slowly and that the blow is all coming at once. Whatever my right hon.

and hon. Friends may think of his other points, I believe that that is a powerful argument. It has been suggested—I believe the figures to be correct—that if a self-employed person and his employee both have an income of £62 a week the self-employed business man will find that his employee has to pay £13 less, whereas he has to pay £120 more. That is an indication of the harshness of the blow, of the fact that we are not hastening slowly and that the Government are proposing to hit the self-employed hard and quickly.
The self-employed are also the self-reliant. They are the least inclined, almost by definition, to rely on the State or to rely on others.

Mr. George Cunningham: Mr. George Cunningham rose——

Mrs. Kellett-Bowman: Oh no, not again. Do not let the hon. Member for Islington, South and Finsbury (Mr. Cunningham) intervene.

Mr. Cunningham: Does not the hon. Member for Gloucestershire, South (Mr. Cope) think that there is a degree of irony in referring to the self-employed as self-reliant—which is in general manifestly true—and then to suggest that they should receive benefits in excess of those for which they pay by cross-subsidy by another category? Is that self-reliance?

Mr. Cope: I shall not take up the argument on the figures that the hon. Gentleman has introduced. He shot them down himself when he talked about tax relief, which he then tried to leave out on the ground that that was for the Finance Bill. The self-employed are the self-reliant, and we should not clobber them in the way that is proposed.

Mr. William Hamilton: Perhaps it is about time that someone from the Government benches said a word or two. Mention has been made about the attendance in the Chamber for this debate. There are now present 13 Conservative Members against five Labour Members. The attendance is not all that great on either side, so let us not make too much of that point.
We start with the proposition that no one likes to pay more for anything, whether it be rates or rents, income tax or national insurance contributions. The Conservative Opposition do not do their


cause any good by an exercise in overkill. To pretend, as they have sought to pretend, that the self-employed are the salt of the earth and therefore, by inference, that the others are the useless people, is nonsense. Of course the self-employed have grievances—have not we all? Those grievances stem basically from inflation. Whether or not we had these increased contributions, the self-employed—the small business men— would be faced with growing and increasingly difficult problems. They are being steadily overtaken and put out of business not by increased taxation or increased rates, or whatever, but by the growth of multi-national companies.
In the figures over the years, one sees a steady decline in the one-man or family business and the growth of the supermarket and big store. It has nothing to do with what we are debating today. But, of course, the Conservatives are trying their best to make bricks with whatever straw they can find, and here they have found some straw. One can understand their difficulties, because they are going through a traumatic experience.
One hon. Member has said that he and his colleagues are moderate, that they are seething quietly with anger about this proposal. But one has only to read the intemperate speech by the initiator of this movement for the self-employed to realise where his political loyalties lie. Let the Conservative Opposition not pretend that they are merely looking after the most deserving section of the community. My hon. Friend the Minister of State referred the right hon. and learned Member for Surrey, East (Sir G. Howe) to the figures he quoted in Committee on 19th November. My hon. Friend said then:
The great divide between us for a Schedule D profit or gain at £2,400 a year is 17p a week more under our proposals than under theirs … and at £3,600 a year, it would be 63p more a week.
What we are talking about is whether those with the lowest income amongst the self-employed should be required to pay 14p a week more. We say, 'No, they should not. Let us hold it down for them' … in order to help those lower paid self-employed people—half a million of them, perhaps more—the man with £2,400 Schedule D profits or gains pays 17p a week more, and at the ceiling of £3,600 63D a week more. That is the situation which divides US."—[OFFICIAL REPORT, Stand-

ing Committee A, 19th November 1974; c. 153.]
The Conservative Opposition indicate that they would put this burden on the employees in class 1—the ordinary employees. It is a difference of opinion.
On the Government side of the House there are loyalties to outside groups, just as there are loyalties opposite to outside groups. We are subject to perfectly legitimate pressures and representations by outside groups, and we are more amenable to them than the Opposition are. Similarly, they are under pressures from outside groups to which we would not listen. That is how our political system works. All of us in this House, including the Liberal Party, are subject to the pressures of outside groups—perfectly legitimate pressures. I hope that we shall get this question into proportion. I hope that we shall not cry, "Stinking fish" too much, and that the Opposition will not overstate their cause as they have been doing.

8.15 p.m.

Mr. McCrindle: I wonder whether I am the only Member concerned about the situation of Members of Parliament in regard to this matter of being self-employed. I wonder how many hon. Members have seen the letter in The Times today, in which the writer reminds us that up to next April hon. Members are considered to be self-employed, but that just at that time when the burden of being self-employed is about to increase, they are to be given the choice of remaining self-employed or becoming employed.
When this matter came up before, I was told that these things were raised through the usual channels during the passage of the Social Security Act 1973. I played a modest part in the proceedings of that Act and it was a surprise to me.

Mr. George Cunningham: Me, too.

Mr. McCrindle: I am interested to hear that comment about those exchanges. At the time when there is some cynicism in the public mind whether we look after their interests or are more prepared to feather our own nests, our public relations in this matter have been abysmally poor. Even at this late stage, so as not to be seen to be advancing our own case unduly, perhaps the Undersecretary of State would be prepared


to take the opportunity of presenting to the public the position of hon. Members on this matter.

Mr. Alec Jones: Perhaps it would be convenient if I made an explanation at this point, since the matter is of considerable importance and interest. The position is that the transfer of hon. Members is part of a general transfer of all groups of office holders with emoluments assessable to income tax under Schedule E, into class 1, where they belong. It is not happening only to hon. Members. It was part of the Social Security Act 1973. The decision was made after consultation with right hon. and hon. Members on both sides of the House. It was supported by the then Labour Opposition, and there was no question, either then or now, that hon. Members or any other group of office holders, including judges, company directors and a whole host, were seeking to minimise their contribution liability. This was not sneaked in. It was part of the general transfer applicable to all groups of office holders.

Mr. McCrindle: I am grateful for that clear statement. I hope it will be given suitable publicity so that any suspicion which, understandably, exists in the public mind will be dispelled.

Sir G. Howe: As I understand it, at the time when hon. Members were transformed from being self-employed into employed, the rates of contribution then proposed to be payable in the 1973 Act were lower for the self-employed, at 5 per cent., than they were for the employed, at 5¼ per cent. At the time Parliament made the change and transferred us from self-employed to employees, Parliament was working to the disadvantage of hon. Members. It is only because of the eccentricity of this Government in seeking to raise the contributions by the self-employed from 5 per cent. to 8 per cent. that, by chance, this ill-judged measure turns out to be to the advantage of hon. Members.

Mr. McCrindle: I accept the point of my right hon. and learned Friend. It makes it all the more important—because, by accident rather than design we may be seen to be benefiting in this way—that the Minister should have made his statement.
The two amendments we have been discussing are linked in that both will produce a degree of anger among those sections of the community which hitherto have been unable to hit back—married women and the self-employed. The difference is that the anger of the married women is almost bound to be delayed until some time in future when they realise what is about to hit them, whereas with the self-employed that anger has already become manifest and has led to the creation of at least one organisation among people who by the nature of their occupations have been totally disorganised in the past.
The Government's proposals are a direct attempt to impose an additional burden on a particular section of the community. Even if they were acceptable, the difficulty is that the attempt is being made to introduce this additional burden virtually at one go. Not for the self-employed the progressive movement to a situation that may or may not be desirable. In many ways they are not just being imposed upon, they are being imposed upon to an insufferable degree. This has been seen as unjust and discriminating.
It is right to ask why it is that the Government should be taking this action. I believe that it is because of a lack of identity with the self-employed, a lack of sympathy with them. I have taken part in many Standing Committees with the Under-Secretary and the Minister of State. I accept absolutely their close identity and understanding with, for example, the mining community. I would listen with great interest to what the miners were supposed to be thinking if it came from the lips of either hon. Gentleman. I am bound to say that I do not think that they understand or sympathise with the motivations of the self-employed. The initiative required before a man gives up security of employment and seeks to become self-employed is simply not appreciated any more than the independence that is part of becoming self-employed is valued on the Labour benches.
I listened with great interest to what the hon. Member for Fife, Central (Mr. Hamilton) had to say. He almost bemoaned the passing of the self-employed business man and put it down to the arrival of the multi-national company. On


the contrary, there is now, and I sincerely hope there always will be, room for the small self-employed man to give that acute personal local service in competition with the multi-national company. It is the Government's proposed action which is leading to the snuffing out of this initiative and independence.
Is it prejudice? The answer is that it must be. I ask, is it ignorance on the part of Labour Members? Again I am forced to the conclusion that to a large extent this must be so. There is a failure to identify. I want to express my pleasure on one point and that is that by the very nature of the action proposed by the Government, attention has been forced upon the difficulties which the self-employed have been suffering for some years and which in the past they have suffered in relative silence, overlooked by the rest of the community. By the nature of the imposition the Government seek to direct to the self-employed, they have brought about the banding together of the self-employed. They have forced them to recognise who are their friends and, by the same token, who are their enemies.
Even at this late stage the Government would be well-advised to recognise that whatever they may believe about the socialising of the economy, there is no Government of any political complexion that can continue to run a successful economy without the self-employed.

Mr. Alec Jones: Can the hon. Gentleman explain one point? He is suggesting that the Conservatives are the friends of the self-employed, when the amendment moved by his party in Committee would have increased the contribution of the lowest-paid among the self-employed.

Mr. McCrindle: It is easy to single that out, and I do not seek to deny it. The point I have been making is that the whole animus behind what has been said from the Labour benches on the question of the self-employed indicates that, not just on this occasion but on every conceivable occasion that presents itself, the Government will take it out of the self-employed. I can only deduce that that is because of the lack of sympathy to which I have referred and an ignorance of what animates the self-employed man. If,

in replying to the debate, the Undersecretary can dissipate my feelings in that regard, no one will be more pleased than I.

Mr. John Page: Most of the juice has been squeezed out of the lemon of this amendment by my hon. Friends, and a pretty bitter drink it has made for the Minister. The hon. Member for Fife, West——

Mr. William Hamilton: Fife, Central.

Mr. Page: Very well, the hon. Member who one day may become a self-employed pauper said that he hoped that people in the debate would not cry stinking fish. Then he cried just that with his strong lungs. He said that there were outside groups to whom he would not listen and to whom he did not think other hon. Members would listen. I am surprised at this. I would welcome sensible and thoughtful discussion with any group of my constituents. Sadly, the trades council in Harrow seldom asks me to pay it a visit, or responds to my invitations. I fear that is because it does not wish to have its case destroyed by my ineluctable eloquence.
The Bill is a swingeing attack on the self-employed. I beg the Minister, even at this late stage, to ask his right hon. Friend whether this amendment is not acceptable. If the Government do not accept it they will be showing a cynical and vindictive attitude towards private enterprise and the small business.
The Government seem to hate people who try to fend for themselves. In the Bill the Government attack the professional person, the small businessman and the small shopkeeper——

Mr. Cormack: And farmers.

Mr. Page: There are few farmers in Harrow. The late A. P. Herbert once said "I will never discuss agriculture", and I follow him.
I am speaking of the small shopkeeper—the pharmacist and the shop on the corner. My hon. Friend the Member for Gloucestershire, South (Mr. Cope) referred to a shopkeeper employing a person who earns the same wages as he earns. That can easily happen in a chemist's shop. This differentiation between the employed and the self-employed is ridiculous.

8.30 p.m.

Many hon. Members on both sides of the House have had letters from constituents appealing for action against this part of the Bill and in support of the amendment. I picked up two such letters as I came into the Chamber early this afternoon. The first is from a lady whose husband is engaged in transport in a small way. The letter reads:
My husband tries hard to earn an honest living, but petrol is going sky-high in price, and so are repairs, tyres, etc. He does his own servicing on the car to try to cut his costs. Once again we shall be hit by this 8 per cent. increase upon income tax".
It is interesting that that should be appreciated by the lady—
If we put our prices up we are increasing inflation, which we are all striving not to do, and also pricing ourselves out of business. As my husband is now 55 he would have a terrible job to get alternative employment. I think you will agree.
The new impost will attack the small person trying to look after himself.

The other letter comes from a member of the Institute of Linguists. It is dated 23rd November, and under the heading "8 per cent. Tax on Self-Employed" states:
In respect of the above tax the meeting was in favour of some collective action against it.
He described it as "legalised extortion". Is it not pathetic that what has become known as industrial action is being forced upon the Institute of Linguists? I accept that the collective action that the institute could take would not hurt the Government very much, but it could hurt a number of outside organisations, and most of all it would hurt the institute.

I was hoping that the Minister of State would be on the Government Front Bench. I recollect that he was once a self-employed musician—a saxophonist, I believe. I have recently taken up the saxophone. I was hoping to beg him, instead of "facing the music", to start to play in tune with the House of Commons and the country and to accept the amendment and the applause of many worthy and responsible people.

Mr. Beith: I share the feeling of my hon. Friend the Member for Truro (Mr. Penhaligon) and many other hon. Members about the serious effect of the proposals on the self-employed if the amend-

ment is not carried. I do not share all the imputations of bad faith which have been made against the Government. A series of Ministers, each in a different sphere, is doing things which will harm the self-employed but none is prepared to stand firm and to say that the total effect of all the measures is such that his Department will look more carefully at the problems of the self-employed. Several instances have been mentioned. The Ministers in the Department of Health and Social Security should have stood firm and said, "This on top of everything else is too much".
I wish not to rehearse general arguments but to deal with a specific point, and I shall detain the House only for a few moments. I am delighted that the Minister of State has returned, because I know that he has taken a personal interest in the group about whom I am concerned, and I gave him notice that I wished to raise this problem.
I am thinking of ministers of religion, of whom there are a goodly number in my constituency. I am pleased to have so many of them as constituents. By a curious anomaly they are treated as self-employed people. Many of them are in the earnings bracket below the £1,600, which is the cut-off point. Some who are just above it are in perhaps the most damaging position of all under the proposals.
I received a letter from a minister in the United Reformed Church. His gross monthly pay is £120·84 and after deduction of tax, superannuation and car loan repayment he is left with net pay of £87·45 a month. He was frightened by the proposals, but I think that the Minister will be able to reassure him that he will not be directly affected by them. He says that most truly self-employed people must earn many times the salary of the clergy and many will be able to recover the increased costs through the increased goods and services they supply, yet their rates of contribution will be the same as those of many clergymen. He says:
Ministers are only deemed to be self-employed for the purpose of National Insurance possibly, because we are never at risk of becoming unemployed.
I hope he is correct in that assumption.
There would be no purpose in insuring against unemployment the fact that we are in receipt of a fixed income, and there is no way


in which we can increase our earnings, no matter how hard we work.
I am sure that the House would wish to pay tribute to the hard work which so many ministers undertake. Therefore, I hope that the anomalous position of ministers of religion will not end in such a way that they are dealt a serious blow when the Bill passes into law. I hope that the Minister can give them some crumb of comfort.

Mr. O'Malley: Perhaps it will be helpful if briefly I were to seek to clarify the situation of the clergy. When I came into this office I found that discussions had already taken place between the departmental Minister of the day and the Churches Main Committee representing a large number of Churches. I continued those discussions and was able, with the agreement of the Churches Main Committee, to come to an arrangement, at the Committee's request, that as from April 1975 for an interim period of one year they will remain class 2 contributors. They will have the opportunity to consider the White Paper "Better Pensions" and to consider in detail at their synods and meetings next year whether they wish to approach me asking for class 1 or class 2 status. Therefore, the interim position is satisfactory to the Churches Main Committee.

Mr. Beith: I am grateful for the Minister's intervention. What he said tonight may not yet be known to members of the clergy. They will be anxious about the situation next April, but they can now have the assurance that a choice will be open to them. I am grateful for the Minister's observations. The House can now return to the broader issues raised by the debate.

Mr. James Kilfedder: I made my plea on behalf of the self-employed during the Second Reading of the Bill and therefore my remarks will be brief. They are addressed to the Government in the hope that, even at this late stage, they will act fairly towards the self-employed.
The new class 4 amounts to unfair, even harsh, treatment in respect of one section of the community. That group has contributed a great deal to the country; it has contributed to the character and wealth of the nation through its industry

and enterprise. Many self-employed people work hours which would be unacceptable to trade unions. Self-employed people work hard and long hours in order to earn a decent income. Yet at the end of the day they face the imposition by the Government of this additional tax.
Some hon. Members have tried to quantify the amount of benefit which the self-employed will receive, but irrespective of that amount, the tax may be the final straw that will break the camel's back. The self-employed person represents a wide spectrum of the community. It is made up of farmers, shopkeepers, small business men and others—all of whom have suffered grievously in recent years. In Northern Ireland there are 38,000 small farmers. They have faced virtual disaster, especially the beef producers, and yet they will have this extra burden to bear.

Mr. O'Malley: I accept the hon. Gentleman's proposition that a number of individual farmers in his constituency and elsewhere have suffered as a result of the state of the beef market or other factors, and the profits or gains accruing from Schedule D will be substantially lower than they would otherwise bear. Will he accept the proposition that there should be no increase in the basic class 2 contributions and that this will help rather than hinder the farmers or other small business men whose profits or gains are eroded as a result of current economic circumstances?

Mr. Kilfedder: Although I was not invited to serve on the Standing Committee, I listened carefully to what the Minister said on Second Reading. It may be that when this measure becomes law we shall see whether people such as farmers do better than I expect. I fear that they will not, and it is possible that I shall be able to point out to the Minister in due course the real difficulties that they are facing.
If I may take just one problem, farmers, at least those in Northern Ireland, find it very difficult to prove that they have retired. The average farmer likes to retain his farm in his own name, and he likes to live in the farmhouse. His son takes over the running of the farm, but, because there is this difficulty in proving that he has retired, there is often


considerable delay in paying retirement benefit. I hope that the Minister will look at that in due course.
That problem apart, there is no doubt that the consequences in Northern Ireland of the Government's proposal to increase the financial burden on the self-employed could be disastrous, bearing in mind that probably there are more self-employed people there than there are in England as a proportion of the population. That is especially true in the present situation, where terrorism is rife, and even more so for people in receipt of net incomes of £1,600 a year, just on the border line. Already they have difficulty in paying the class 2 stamp. That is why I feel that what in effect is a new tax on the self-employed in receipt of incomes between £1,600 and £3,600 a year, without any new benefit, although other contributors to the National Insurance Fund will receive the additional benefits, is a shocking imposition, is inequitable, and should be rejected.
For those brief reasons, I intend to vote in favour of the amendment.

Mr. John Horam: The hon. Member for Berwick-upon-Tweed (Mr. Beith) referred to clergymen in relation to the Bill and perhaps also in relation to the amendment. I wish to refer to another special case which is rather outside the general stream in this debate. It is that group of self-employed people, often organised by the Transport and General Workers' Union, of which I too am a member, namely, taxi drivers.
Hon. Members will know that taxi driving is a complicated world, with many complicated legal provisions. The simple distinction is between the owner-driver, who is self-employed and adjudged self-employed in every respect, and what is known in the trade as the bailee—who is self-employed for tax purposes but whose employer has for at least the past 25 years or more made a contribution to his national insurance provision. In that respect, therefore, he is not self-employed.
Under the 1973 Act, that position will be changed. For all purposes the bailee taxi driver will be considered self-employed and therefore will transfer from a situation in which his employer was making some contribution to his national insurance provision to one where he makes no contribution. The bailee him-

self will have to make all his national insurance payments and therefore will be doubly disadvantaged.

8.45 p.m.

I must make it plain that this is not in consequence of the present measure. It is a consequence of the 1973 Act. I agree that the situation that pertained until the 1973 Act was anomalous, in that it had elements of both the self-employed and the employed in the treatment of this category of taxi driver. None the less, anomalous though it may be, that type of self-employed driver will be at a considerable disadvantage and heavily penalised financially as a result of the operation of the 1973 Act.

It also happens that the taxi trade— the union as well as the employers— has been working on the drawing up of a pension scheme. At the moment taxi drivers do not have any pension provisions, but the trade was working on a pension scheme. This will be entirely killed by the 1973 Act, because no contributions will be legally possible from the employers' side. Also taxi drivers, by the very nature of their trade, find it difficult, because of the expense, to get any kind of proper sickness or accident provision. Such a scheme was also being worked out, but that may be affected by the 1973 Act.

Mr. O'Malley: I have some knowledge of the complex and unusual matters to which my hon. Friend is referring. I am grateful to him for recognising that the difficulties that he has described arise not from this legislation but from the Social Security Act 1973. It is clearly not possible to discuss the details of an unusual set of circumstances in this debate, but I am willing to discuss the situation in detail with him because I recognise his union interest in the matter.

Mr. Horam: I am grateful to my hon. Friend for those sentiments and I will take up his offer. Perhaps he will see some of the taxi drivers involved, some of the union negotiators who represent them, and myself. This is not a matter which can be dealt with in this debate. On a strict interpretation of the Bill and the complicated subsidiary regulations which may emerge, the burden could be extremely heavy. I ask my hon. Friend to consider this situation sympathetically and to try to find some way of softening


the blow which will fall on taxi drivers in April. I hope to take up my hon. Friend's offer in the interests of the taxi trade.

Mr. Cormack: The debate has just taken on a nice conciliatory tone with the Minister's interjection in the speech by his hon. Friend the Member for Gateshead, West (Mr. Horam). The hon. Gentleman said that he would be delighted to discuss these issues with him because he was a union spokesman. The self-employed do not have union spokesmen, but they have had many spokesmen in this debate. I sincerely hope that the Minister, whom I know to be a man of compassion and concern for people, will have listened to and taken note of what has been said but will do something to alleviate the burden on the self-employed.

Mr. O'Malley: The hon. Gentleman suggests that the self-employed have no body to represent them. Large groups of the self-employed have bodies to represent them. For example, general practitioners have the British Medical Association. The hon. Gentleman will be aware of the newly-formed National Federation of Self Employed. I met a delegation from that body last night for more than two hours. Of course I am prepared to meet representatives of organisations, whether they represent employed persons, self-employed persons, employers or any other group of individuals who are affected or are members of the National Insurance Scheme.

Mr. Cormack: I am glad to hear it. I would expect no less from the Minister. I hope that he will listen when they come, as I hope he has listened tonight. We are not talking about the more affluent of the self-employed. The thread of our argument has been particularly concerned not with them but with those people who have really made a social contract with society——

Mr. Tuck: Mr. Tuck indicated dissent.

Mr. Cormack: I am glad to see the hon. Member for Watford (Mr. Tuck) nodding. He made a powerful speech. I hope that even at this late stage he will put his vote where his voice was, but I will not embarrass him too much, because

we hope to welcome him with open arms into our Lobby.
The self-employed have made a social contract. They have often put service above self and have given to the community far more than they have taken. If one wants to find people who work all the hours God sends, for whom thrift and enterprise and initiative are watchwords, one looks at the self-employed. If one wants to find people who have served their community, one can do no better than see some of the small shopkeepers in both rural and urban constituencies. They keep their shops open to serve the community, often receiving a mere pittance in return. Their salaries and earnings do not compare favourably with the national average earnings. They are often old people, people who believe that they are giving the community a service.
There are many farmers in my constituency, and, like my hon. Friends, I am acutely concerned about the tremendous problems facing British farming. No one works harder than the farmer, especially the small farmer. These are the people who are being imposed upon by this threatened legislation and who will suffer extra burdens without the amendment.

Mr. Tuck: I remind the hon. Gentleman that even the leaders of the Labour Party, like George Bernard Shaw, H. G. Wells and William Morris, were self-employed. This kind of thing will also militate against the intellectual self-employed—for example, sculptors, authors, artists and musicians. They cannot, as the plumber around the corner can, suddenly become employed persons.

Mr. Cormack: I am grateful for that intervention. I was not aware that Wells, Morris and Shaw had been leaders of the Labour Party. Would that they had been. It would probably have been a more sensitive party if they had led it in this House. They would have appreciated the needs of the self-employed. They were creative people, with sensitivity and sensibility—the things for which my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) appealed. They would not have connived at this imposition—[Interruption.] As my hon. Friend has just whispered, they would probably have crossed the Floor in horror at what the Labour Party is doing.

Mr. Deputy Speaker (Mr. Oscar Murton): Order. I think that the hon. Gentleman is straying slightly from the amendment under discussion. I should be grateful if he would address his mind to the amendment.

Mr. Cormack: I was indeed addressing my mind to the subject under discussion, Mr. Murton. Fascinating byways were indicated by the stimulating intervention of the hon. Member for Watford. If he wished to intervene again, I am sure that we should all be delighted.
This is a serious subject, and the people who will suffer are serious, hardworking people, who put a great deal into society and take very little out. I do not have the comparative statistics—I do not suppose that anyone does——

Mr. George Cunningham: I do.

Mr. Cormack: If the hon. Member, who has already been called a calculating machine, would just listen before pressing the button, he would understand the point that I am making.
I was about to say that we do not have the comparative statistics about illness, but I should think that the self-employed would be more inclined than other people to remain at work, because they have no one to whom they can pass on the burden. These people deserve our consideration and everything that we can possibly give to encourage them to foster their talents. They are very much the backbone of the country. I hope that even at this late stage the Minister will allow his heart to melt a little. These are very often the forgotten people—the people who have no one to speak up for them properly. I am glad that they have formed a federation. I wish it well. But even if their federation is truly launched on the national scene, and even if they are able to hold meetings, they are not able to go on strike or to hold a pistol to our heads. They have still to serve and to give. It is about time that we realised just how much they are giving. It is about time that we encouraged and helped them.
To place this fearful imposition on them—this tax on thrift, enterprise and initiative—is something of which the House of Commons should be heartily ashamed and should never even have contemplated. This debate should never

have been necessary. But the debate has taken place, and I hope that the message has got home to the Minister. I hope that at the end of the day he will have the magnanimity, the bigness of heart, to stand at the Dispatch Box, without his saxophone, and to play the right tune.

Mr. William Molloy: I have listened to the debate for about three hours. It is about time that someone came to the defence of the self-employed, because one would think from listening to Conservative hon. Members and some Liberals that there is a bunch of useless, hopeless people who are all on the bread line, all hanging on the last strings of poverty, called the self-employed.
I do not believe that. I do not believe that the self-employed are degenerate, beggarly and poverty-stricken in mind and pocket, as has been said by right hon. and hon. Members of the Opposition. It is about time that someone said something in defence of the self-employed. It has been said that there is no one to represent them. Are the Opposition saying that only the rich farmers can join the National Farmers' Union? Is anyone saying that? The massive cry of opposition to my suggestion is deafening.
What we have heard tonight is the most overstated case that has ever been made in the House of Commons. I concede immediately that there is something to be said for some of the more sane and balanced submissions that we have heard. But if ever there were a case ruined, it was that for the self-employed. If ever any part of the British community has had almost its honour as well as its intelligence massively insulted, it has been the self-employed tonight.
The little baker, the butcher and the candlestick maker exist to give a service. They give an excellent service. The only time that they have been denied the opportunity of giving that service was when there was a Conservative Government who had a policy of creating 5 million unemployed.
If my words reach the self-employed, they will not be too desperately disappointed. They will not have their morale completely obliterated, as it would


be if they read some of the comments made this evening by the Opposition. They will understand, however, that while they may feel irritated or annoyed about some aspects of the Bill, the surest safeguard for their prosperity will be the united policies of all sides of the House of Commons.
I admit that in ourselves we are an amalgam of people who have a general principle but different ways of approaching it. But there is a fundamental point which unites the Labour benches but does not unite the Tory benches. Whatever differences we on the Government side of the House have, we are united in desperately trying to maintain the principle of full employment. That is essential to the self-employed and the employed. The Conservative Party is split whether there shall be so many millions of unemployed. This is what hurts Tory Members. The anguish on their faces is plain to be seen. They know that if some elements of the Tory Party had their way there would be massive unemployment. If that were to happen, it would not be merely the person who was at one time employed who would be hurt. The results of such a policy would be more damaging and dangerous to the self-employed than will the small provision that my hon. Friend is introducing tonight.

9.0 p.m.

Mr. Nicholas Winterton: I will not follow the hon. Member for Ealing, North (Mr. Molloy) in the argument he has addressed to the House. I merely express the hope that in approximately 12 months' time, when the unfortunate effects of the Government's policy come home to roost, he will come here again and harangue us about more than 1 million people being unfortunately unemployed owing to the policies of his Government.
I support the amendment. It is a very important one. I shall not go over many of the arguments which have been advanced by hon. Members on both sides, particularly by my right hon. and hon. Friends. The self-employed are the entrepreneurs in society, whatever their income, whether it be large or small. The fact that they are entrepreneurs does not

mean that they are not vulnerable. As was so rightly said by my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), when self-employed fall ill they are not able to have somebody to look after their business for them. Unlike many people who are employed, they are thus particularly vulnerable. I do not believe that the self-employed are entitled to draw sickness benefit, but this may have been overlooked by some hon. Members who have spoken. While the self-employed are ill and absent from work, their business, which may have taken a very long time to build up, can almost disappear.
I hope that the Minister will appreciate that we are not trying in this debate to overplay the position of the self-employed. Much criticism has been poured upon the Government in this debate. If the Minister can be criticised, it is because he has chosen this time to load the self-employed with such a heavy extra burden. These people have been faced with dramatic inflationary costs. Many self-employed, particularly retailers, have not had the benefit of the rates relief which has been available to domestic ratepayers. These people have had to meet vast additional costs. This could easily be the straw that breaks the camel's back.
Many categories of self-employed, such as pharmacists, farmers and retailers, come into this discussion. We know that the Minister is not an unsympathetic person. The case for taxi drivers received what I would describe as a moderate and reasonable airing just now from one of his hon. Friends. I hope that many other people who next year will be faced with heavy additional costs will be treated moderately and understandingly by the Minister.
Is it so terribly difficult for the Government to accept this reasonable amendment? We have had to fire some pretty heavy salvoes to make any impression upon the Government, but surely that is the duty of an Opposition. I have no vested interest in the self-employed, except that I admire what they are doing. They are an essential part of our economy. I hope that in the Division some hon. Members opposite will show that they appreciate just what service the self-employed render to the British people.

Mr. Giles Shaw: As we come towards the end of this debate, it is right that we reflect that many hon. Members have spoken because of their constituency problems. I know of no matter in recent weeks which has aroused more anger among certain of my constituents than this proposal. Many people have by correspondence and in delegations sought to plead that some of us take some action to draw the Government's attention to the difficulties faced by the self-employed. No matter how irritating it is to see the length of the debate being stretched, it is vital that an opportunity is given to plead their case. A number of points have been well made by previous speakers and I shall dwell merely on one or two matters.
The people who will be affected by these proposals are not merely those in the larger groups, such as the farmers, the pharmacists and the retailers we have heard about, vital though their services are, but frequently they are individuals, running small businesses, in some cases in their own homes.
I have met a delegation from an association representing the retail trades which has advised its members, in view of the increases that will be facing them from next April, to consider encashing individual insurance policies to cover the cost of the increases. That sort of advice indicates that the problem with which we are concerned will bear most heavily on those individuals who often do not have the chance to get together to state their case.
Almost all hon. Members have been approached by retailers. Although the hon. Member for Fife, Central (Mr. Hamilton) made play with the competition from major international stores, it is not true that the retailer has been driven out of the High Street by the large businesses. The survival of the small shopkeeper is demonstrated by the fact that many thousands of them are still in business, but year by year increased costs are borne upon them, whether in the form of rates, or in nationalised industries' prices, or, as in a previous era, from SET, or now from VAT which is still, I am glad to say, virtually at a single rate. If it ever moves to a multiple rate it will put retailers out of business.
All these costs have been gradually imposed on shopkeepers and others with small businesses, and have gradually impinged on their operating margins. Now the insurance stamp is to become yet another burden to add to others that have been imposed in the past four or five years. Regardless of which Government is in power, the fact remains that for small businesses and shopkeepers, and many others who serve our society in a similar way, costs have increased.
We have here another indication of those who take risks being clobbered. It does not matter what form of risk they take—whether as an investor or as a house-owner or in setting up in business or in being self-employed; they have been clobbered by this Government's legislation. When thought is given to a reduction in risk taking, it seems to matter only if people are in a large body which is able to discuss productivity at national level. The individual contributor who takes risks for himself and for the community he serves could find that a penalty will be applied to him. I am ashamed that risk-taking has been treated by the Government in this way.
If we are to encourage every man and woman in the country to take risks in order to get the country out of its problems, we must first of all encourage the individual. We should not have legislation which suggests that those who take risks in serving others should be penalised.
I plead on behalf of many organisations which will be affected and on behalf of many individuals in my constituency who will be affected, that the Government should have second thoughts and withdraw their proposal.

Mr. John Nott: I wish to intervene only briefly. I do so because in my constituency the self-employed play a major part in both the economy and of course in the employment of the area. I am not particularly concerned with all the actuarial calculations that were debated earlier. What is obnoxious in the measure is the size of the increase and the way in which the relative contributions of the self-employed and the employed person are being changed. The contributions are being changed in a one-step jump, and this is wrong.
Much of the character of the towns and villages of this country is being changed


because many self-employed people are going out of business, for a variety of reasons. These latest proposals will mean an additional burden for the self-employed.
If actuarially it is right that the self-employed should pay more, it would be only proper that the increase should be phased over a number of years rather than as is proposed in the Bill. I come to the conclusion that either the amendment should be accepted or—and I think this would satisfy me—that the Minister should give an undertaking that self-employed contributions should be allowable to tax to the extent that an employer's contribution is now so allowable. A self-employed person depends upon income which he generates to plough back into his business for investment. In that respect he is in the same position as the employer. It is relevant to say that in many parts of the country employment—in my constituency the majority of employment—is very much dependent upon the self-employed continuing to run their businesses.
I am particularly concerned about this measure because I believe it will place an additional burden on the self-employed and will probably add to the serious unemployment situation which we shall clearly face in 1975. It is important in current conditions that no section of the community should feel that it is being discriminated against. There is no doubt that the self-employed feel that they are being so discriminated against, and this will not make the Government's problems any easier.

I fully support the amendment.

9.15 p.m.

Mr. O'Malley: Many, although not all, of the contributions which have been made in this debate from the Opposition benches have been extravagant in tone and have been markedly lacking in fact. There has been abuse and a degree of emotion which, if I chose to answer in the same way, having been a Member of this House for a number of years, I think I could at least match. Political invective—and all politicians can follow and match political invective—has been evident in some, though not all, of the speeches which have been made in this debate.
I think that since we are dealing with a subject which affects the interests of up to 2 million people in the years ahead, it is proper that, as the Minister responsible for the proposals which we are discussing tonight, I should not reply to the debate in the tone of many of the speeches which we have heard. I believe that the most useful thing I can do is to set out the background facts and circumstances which led the Government, and myself as a Minister responsible, to the conclusions which are embodied and enshrined within this Bill, including that part which would be affected by the amendment.
I will give the background circumstances, and I put them in cold, unemo-tive, unvarnished language because I have a respect for the judgment of the House of Commons which, when faced with facts and with sound argument, can shed and cast aside some of the fripperies and extravagant language which is sometimes used in debate in this place.
I will outline the background facts and arguments which led the Government to the conclusions contained in the Bill. At the outset of the National Insurance Scheme in 1948, for the benefits which the self-employed were to receive their contributions should have been set at about 90 per cent. of the contributions which were payable on behalf of employed persons. As an act of political judgment the then Government—a Labour administration under the Prime Ministership of Clement Attlee—set the level of self-employed contributions at about 70 per cent. of the total contributions payable in respect of Class 1 contributors. It was presumably done because it was felt that to set the level at 90 per cent. would have placed what was clearly regarded at that time as an impossible burden upon the self-employed.
Between 1948, the outset of the scheme, until 1961, the year in which the Boyd-Carpenter graduated pension scheme came into operation, the contributions paid and payable by the self-employed Class 2 contributors were set at about 70 per cent. of the contributions paid on behalf of Class 1 contributors. For those 13 years successive Governments felt that although there was a degree of subsidy to the self-employed, the 70 per cent. figure was about right. It varied from year to year, but the average was about 70 per cent.
There was therefore established during that period a national insurance system dependent entirely on flat-rate contributions by both the self-employed and the employed persons. There was established that which is now desired by the Opposition Front Bench—a consensus on the subject. It was thought that 70 per cent. or thereabouts, on the whole, taking account of all circumstances, including the circumstances of the self-employed and the nature of their occupations, was about right.
In 1961 the Boyd-Carpenter graduated pension scheme came into operation and the contributions were payable through the Schedule E machinery by which the employed person pays his tax liabilities and upon which an assessment of his reckonable earnings is made. But it was not possible so to assess the self-employed because of the significant differences which existed at the time and which still exist between Schedule E and Schedule D tax provisions.
Therefore in the period after 1961 until the right hon. Member for Leeds, North-East (Sir K. Joseph) began to formulate the proposals later enshrined in the Social Security Act 1973, increasing and very large sums were paid by employees and their employers in graduated contributions. That money was used in bulk to pay for the flat-rate pensions of the retirement pensioners of that decade, whether those pensioners had previously been employed persons, employers or self-employed persons. The ratio was established during the 13 years between 1948 and 1961 for sound administrative reasons. The Conservative Government from 1961 until 1964, and the Labour Government who succeeded them, found themselves unable to bring the self-employed into any type of graduated or earnings-related payment.
When the right hon. Member for Leeds, North-East made his appraisal of the operation of the social security system in the early 1970s, he moved first to a fully earnings-related system of contributions for class 1 employees and their employers, and he moved as far as he could towards a system of graduated contributions for the self-employed. As the spokesman for the Labour Opposition, in the proceedings on the Social Security Act, 1973, I backed

the formula of the structure postulated by the Conservative Government. Because the Government were unable to go to completely graduated, completely earnings-related contributions, there was to be a class 2 contribution for the self-employed—that is, a flat-rate contribution. In addition, there was to be a class 4 contribution.
I stress that that structure was not one that I created. The Government have been accused tonight of being vindictive, malicious and evil to the self-employed. I inherited the structure that will come into operation from April 1975.
The right hon. Member for Leeds, North-East decided that there would be a flat-rate contribution and a class 4 contribution at the rate of 5 per cent. between £1,150 and £2,500 a year of profits or gains assessed under Schedule D.
When the right hon. and learned Member for Surrey, East (Sir G. Howe) addressed the conference of the National Federation of Self Employed in London on Sunday, the Daily Telegraph of 25th November reported him as having said:
Our proposals were fair and sensible. The self-employed would have paid at a rate of 5 per cent. on any earnings in excess of £1,150 a year up to a maximum of £2,500. On this basis the maximum payable would have been £67·50 a year. But Barbara Castle proposes swingeing increases in these contributions with nothing in return.
The right hon. and learned Gentleman did himself and his integrity less than credit when he said that, because it was always made perfectly clear in the Committee considering the 1973 Act that the figures were purely illustrative and were set at 1971–72 levels. The then Under-Secretary said:
The figures in the Clause, namely £1,150 and £2,500, are also on a ratchet. They are illustrative figures in the same way as the other figures in the Bill are, and, therefore, as the other figures move, so we would expect these figures to move as well."— [OFFICIAL REPORT, Standing Committee E, 25th January 1973, c. 272.]
The situation is that we have moved the figure from £1,150—it is no good the hon. Member for Rushcliffe (Mr. Clarke) shaking his head at me. The hon. Gentleman knows the situation as well as I do. The figures of £1,150 and £2,500——

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose——

Mr. O'Malley: With respect to the hon. Member for Lancaster (Mrs. Kellett-Bowman), I shall give way to sensible interruptions, but with the kind of strident ignorance that we have experienced from the hon. Lady this afternoon I do not intend to give way to her. It is time that she learned to behave in the House of Commons. If she will listen to sensible argument and to a sensible proposition I shall be prepared to give way. The Conservative Front Bench knows as well as I do that in moving the figure from £1,150——

Mrs. Kellett-Bowman: Will the Minister give way?

Mr. O'Malley: No, I will not. I will take sensible interruptions, but I will not give way to the hon. Lady now. I have had some experience of her interruptions. I wish that she would take the trouble to do her homework before she comes into the House.

Mr. Clarke: The Minister is on weak ground.

Mr. O'Malley: The hon. Member for Rushcliffe says that I am on weak ground. If he wishes to challenge me on this matter, he can do so and do so now.

Mr. Clarke: The Minister knows that the passage on which he is dwelling at such fond length has no relationship to the change in the percentage. The quotation he gave from the comments of my hon. Friend the Member for Somerset, North (Mr. Dean) relate to the band of earnings. Our amendment is about the increase from 5 per cent. to 8 per cent. At no stage did the Conservative Government give any indication that they were going to achieve 5 per cent. in the way that the Minister has suggested.

Mr. O'Malley: If the hon. Member for Rushcliffe had not been chattering to his right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) he would have known the stage of the argument that I had reached. I was setting out the background circumstances by which we arrived at the proposition that is in the Bill. I am saying that whether the rate is 5 per cent. or 8 per cent., one matter that is manifest and accepted by the Opposition Front Bench is that the band on which the percentage contribution is to be raised was moved in line with the movement of other parts of

the Bill. The right hon. and learned Gentleman was talking at a mass meeting on Sunday of a band of £1,150 to £2,500. The position of the Conservative Party is that the band in current terms, and on the basis of the proposition put forward by the then Undersecretary of State, of £1,600 to £3,600 a year——

Mrs. Kellett-Bowman: At 5 per cent.

Mr. O'Malley: Yes, at 5 per cent. I was coming to that. I wish that the hon. Lady would try to be a bit intelligent about these matters.
We have the proposition in the Bill that the rate of contributions in the band of £1,600 to £3,600 is to be 8 per cent. The right hon. and learned Member for Surrey, East and the Opposition generally say that it should be set instead at a contribution levy of 5 per cent. Before I pass from this matter, I must say that I wish that when right hon. and hon. Members speak to organisations and to individuals outside the House they would make it clear that the structure is their structure and that the difference between us is not class 4 at 8 per cent. but the difference between class 4 at 5 per cent. and class 4 at 8 per cent.

Sir G. Howe: The Minister is entitled to express his wish in that way. I hope that he will take account of the fact that at every gathering inside and outside this House at which I have discussed this matter—this applies to my hon. Friends as well—we have always made it clear that the introduction of earnings-related contributions for the self-employed was in our legislation. I have sought to remedy misunderstandings about that on many occasions so that there shall be no false premise about the argument. I return to the point that the changes proposed by the Government by raising the percentage tilt the scales further, at a time of difficulty, against the interests of the self-employed. That is unjustified.

9.30 p.m.

Mr. O'Malley: They do not. The right hon. and learned Gentleman is wrong, and he is misleading his party. I will show in detail why he is wrong and why the facts he has stated are manifestly untrue.
The difference between us is whether it should be 5 per cent. between £1.600 and


£3,600 or 8 per cent. I want to explain why the Government decided that it should be 8 per cent. rather than 5 per cent. We could have kept it at 5 per cent., but in order to maintain the ratio as between the class 1 contribution and the class 2 and class 4 contributions at somewhere between 60 per cent. and 65 per cent.—a ratio established by the Social Security Act 1973—we decided on this course.
What we could have done under the conventional formula of the Act was to put up the class 2 contribution from the current £2·41 to £2·70. As recently as August, the contribution had already risen from £1·99 to £2·41. The Government decided there should be no further increase from £2·41 to £2·70 for the self-employed for whom no Conservative Member has spoken today.
The reason was that between one-third and perhaps up to as many as a half of the people who are self-employed and who would have been due to pay increased contributions had, under Schedule D, on the latest available information, profits or gains under the £1,600 figure. We did not want to load on to the lowest-paid self-employed any further increase.
The loss of income and the change in formula by maintaining the figure at £2·41 instead of £2·70 meant a loss to the National Insurance Fund of £21 million, and a loss of balance to that extent. Therefore, in moving the figure from 5 per cent. to 8 per cent., there will be returned £21 million which will come from those of the self-employed who have incomes above £1,600 a year. It will only be those at the top who will have to pay the £160 a year mentioned by the Opposition.
On that basis, I believe that there is an overwhelming case which answers all the charges of inequity which the Opposition have made. But there is one last point with which I want to deal. It was raised in some technical detail in Committee and has been raised in rather less technical detail today. This refers to the question of tax relief on stocks, announced by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement.
There was some concern in Committee that, since the Inland Revenue physically

could not cope with the totality of companies and individual businesses, and was therefore dealing only with stocks above £25,000, there would be a period during which self-employed persons with such stocks would be seriously inconvenienced because of the inability of the Inland Revenue to deal with their problems immediately.
I assure the House that it was only because of the practical difficulties in the Inland Revenue of operating the scheme for stock relief at such short notice, that my right hon. Friend had regretfully to exclude from the relief both small companies and unincorporated businesses. The choice, effectively, was between that sort of limited scheme and no scheme at all. He made it clear, however, that there will be continuing relief next year, and that those, such as the self-employed, who have not benefited this year, will next year get relief covering two years, the relief taking account of the fact that they have had to wait a year for it.
My right hon. Friend also said that he will do everything in his power to ensure that this promise of relief will be taken into account by all concerned, including the bankers of these businesses. The Government are determined to do all they can to help small businesses as well as large companies which have liquidity difficulties arising from the increased cost of replacing stocks.
I should also say something about the timing of the payment of the class 4 contributions because there may be some misunderstanding about these. Liability to class 4 contributions will begin with tax assessments for the tax year 1975–76, that is the 12 months from 6th April 1975 to 31st March 1976. The contributions will be payable with the tax for the year which is normally payable in two instalments, on 1st January 1976 and 1st July 1976. By that time the self-employed will be getting the benefit of whatever relief the Chancellor should decide on next year for stock, since that relief will affect exactly the same tax bills. There is no question of class 4 contributions becoming payable before the stock relief is available. I hope that that will be of some assurance to those hon. Members who have raised this point and also to individual self-employed people outside the House.
I have demonstrated that the ratio and structure contained in this Bill is precisely the ratio and structure put into legislative form by the Opposition. It is interesting to see that the right hon. and learned Member for Surrey, East is once again putting his knife into his right hon. Friend the Member for Leeds, North-East whom he refused to defend in the House two Fridays ago. He is now saying that perhaps they went too fast. He is not even prepared to defend in detail the legislation of the previous Government, namely the Social Security Act 1973.
Many hon. Members have spoken of the fact that there are some benefits which are paid and payable to class 1 contributors which are not paid or payable to the self-employed. That is the case but the self-employed do not contribute towards such benefits. Even after this Bill becomes law, if it is approved, the situation will be that for the same benefits for which contributions totalling 12·4 per cent. are paid and payable in respect of employed people—class 1 contributors— the self-employed at the ceiling will be paying only 8 per cent.
Therefore I completely reject the propositions which have been put forward by the Opposition. It is a pitiful sight to see a party in opposition so unsure of itself that it is willing to do anything for political popularity—to attack not only the Government of the day but even the idea of legislative proposals which it proposed when in Government. This is not an amendment to be taken seriously and it should be rejected.

Sir G. Howe: It is a tragic thing that in closing this important debate the Minister of State should have been driven into such blank and bland denunciations of such total irrelevance to the subject. It is a measure of the insensitivity of the Government, of their failure to measure up to the strength of the case made against them. My hon. Friend the Member for Harrow, West (Mr. Page) excelled himself in describing his own speech as one of ineluctable eloquence. The House have been treated to a great deal of ineluctable eloquence from the Conservative benches and from the hon. Member for Watford (Mr. Tuck), criticising what the Government are doing.
The Minister sought to say that this passion which fired some of my hon.

Friend's speeches rendered them less meaningful and sought to pour scorn on them for that reason. That is a measure of the extent to which the Government have failed to appreciate the strength of feeling about this, of the extent to which they have shown basically faulty political judgment in calculating their reaction to the proposal. Deep feelings are engendered outside the House on this subject and they are entitled to be reflected, as they have been in the debate. The Government have failed to respond to them. Neither on the ground of justice nor necessity has the Minister put forward a convincing case.
The Minister has not demonstrated a capacity to produce good government. One of the functions of good government is to respond to feelings outside the House, strongly expressed as they have been expressed today, asking the Government to find a more equitable way of doing what they want to do. The Government have been conspicuous for the total insensitivity of their response to those pressures during the last four or five months.
I ask the House to consider whether any other group of people organised as trade unions and as employees could be expected to face the Government's intransigence with such tranquillity and so little passion as has been shown by the self-employed. No other group could have been dealt with by the Government in that way and shown so little fury.
For that reason we think that the Government, consciously or not, are demonstrating their insensitivity to and prejudice against the group of people who work on their own account, run their own enterprises and secure their rewards by their own hard work and initiative—the self-employed people. The first charge against the Government is that they do not respond to the plea from that quarter.
Let me examine the facts as the Minister stated them. There is—I have never attempted to challenge it—some force in the argument that a movement in the band of earnings is necessary to take account of price movements and inflation. But it is not sufficient for the Minister to compare the percentage of the self-employed person's contribution with the total of the employer's and employee's contribution and to reiterate, as if it were


the only answer, that the proportion has been kept about the same. Circumstances have changed.
When we introduced our proposals in 1973 income tax was at the standard rate of 30p in the pound. Since then it has gone up by 10 per cent. That is a substantial shift in the burden imposed on the self-employed. Rates have been rising hugely, and inflation has gone ahead hugely. Many other Government policies have been changed to the disadvantage of the self-employed. That is why the Government should have been careful not to make further changes to their disadvantage.
For the self-employed the contribution is not tax deductible. For the employer it is tax deductible. That position has been working more and more to the advantage of the employer as the years have gone by. It is true that in 1946 the percentage of the self-employed contribution to the combined employer-employee contribution was about 70 per cent. and that it has fallen in recent years to a much lower figure. But that is not the relevant comparison to make. The fair comparison to make in terms of its impact on the person paying the percentage is the comparison between the amount that comes out of the pay packet at various times. Under these proposals the self-employed person's share is 95 per cent. of the employee's share, against 125 per cent in 1946. Even before these changes are made the self-employed person is paying almost as much as the employed person and there can be no possible case for shifting the burden harshly against him.
The Minister dealt inadequately with the argument of the hon. Member for Truro (Mr. Penhaligon) about the added burden on the self-employed of the nonavailability of the stock profit provisions announced by the Chancellor of the Exchequer in his Budget. It is not sufficient to say that the administration cannot deal with that. I think the Minister referred to the inability of the Inland Revenue to deal with its problems. It is the inability of the Government to deal with the self-employed and the problems that they have created for them, and the Government's failure to respond, that make it more difficult for the self-employed. It will be of some help that payment will be deferred, but that is noth-

ing like sufficient to meet the overall problem.

9.45 p.m.

It is no use for the Minister to say that he inherited this structure and to seek to load the responsibility on to the Conservative Government. The Minister and his colleagues have made significant changes. They have raised the percentage from 5 per cent. to 8 per cent. Even if the Minister is right to say that the band of earnings should be enlarged and raised to a higher level, the self-employed are being given a distinctly identifiable extra burden to bear. For that they are entitled to blame the Labour Government.

Mr. O'Malley: Does not the right hon. and learned Gentleman think that there is a more serious situation inherent in the inability to get rid of flat-rate class 2 contributions, and that many people on incomes below £1,600—up to one-half of the total number of self-employed—because of the existence of that flat rate could be paying contributions, in total, not of 8 per cent. but of 15 per cent. and even higher? Does he not think that their claims come first and that it was right not to put the £2·41 up to £2·70?

Sir G. Howe: The argument cannot be put in that way. In Committee we advanced a compromise solution. What happened in the April Budget had the effect of increasing the burden put by the Government on the self-employed. To raise the figure from 5 per cent. to 8 per cent. involves not merely raising the figure from £100 to £160 but taking account of the fact that it cannot be set against tax. Until 1965 the amount was able to be set against tax by a self-employed person, but a Labour Government took away that right. That was the first move, which was to the disadvantage of the self-employed. Therefore, it is idle to talk about figures from 1946 because those sums were tax deductible. The rise from £100 to £160 in terms of liability is payable out of taxed income. In the April Budget the Labour Government raised income tax from 30 per cent. to 33 per cent. Therefore, in three different ways the burden of the self-employed person is much larger under the Government's present proposals than anything put forward by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). There is no


escaping that conclusion. This is why the self-employed person feels so deeply about the present imposition.
My hon. Friend the Member for St. Ives (Mr. Nott) cited the extent to which employment in his constituency is largely dependent on the self-employed. There are many other examples one could quote. I have had a number of letters from hoteliers who are affected by the Bill's provisions. They are people who from next April will face a large increase in the sums they will have to find out of an income which has already declined in real value, and an income which is much more heavily taxed. It is no good the Minister seeking to brush aside these arguments. The burden on the self-employed will be greater because of Government action. For the Government deliberately to take the figure from 5 per cent. to 8 per cent., and to take such action in a single jump, will be a tremendous disadvantage to the self-employed. My right hon. Friend the Member for Bournemouth, West (Sir J. Eden) said that we cannot look at these matters in purely arithmetical, statistical or actuarial terms. We are dealing with human beings who from next April, because of the changed system, will have to find an additional sum. In the light of all these considerations we urge the Government to make some concessions to this group of people and to relax the burden.
I come back to the point at which I began. The Minister said that when the structure was first set up in 1946 the decision to put 70 per cent. of the burden on the self-employed was a matter of political judgment. There is no magical formula or mystery about this. It is beside the point to say that it is true that taxes may be going up and that the Treasury may have to do something next year to help the self-employed in the Finance Bill against the burden being put on them by this legislation this year. People outside do not see it that way. They see the burden as what it is—an additional tax. And, on this basis, the tax total will go up next April by about 20 per cent.
What other group could have been expected to face a 20 per cent. increase

in taxes of that kind and in this way? What other group would have put up with it? It is foolish to respond to that sense of grievance by an error of political judgment on the part of the Government. They have under-estimated the impact of it, and it is one which has caused immensely deep feelings outside this House.
We shall be dividing the House on this amendment, which we shall press with all our vigour. We shall continue to press the case from here on until the Bill reaches the statute book. To do otherwise would be to do less than our duty to a group which should be represented by hon. Members on both sides of the House, because their case is a human one.
The hon. Member for Watford (Mr. Tuck) had the courage to criticise the Government for what they are doing. I hope that the hon. Gentleman may yet take his vote where his voice has gone, because we need the support of people of his character and integrity on an issue like this on which this House of Commons is capable of representing the feelings of people outside.
It is a tragedy that, for example, the Minister responsible for the arts has failed to make any impact on the Minister of State in this matter. Has the hon. Gentleman had no consultations? Is there no concern among Government supporters, who seek so often to stand as champions for the arts, about the impact of this change on that group?
Where has the Secretary of State been throughout these proceedings? Not once in any debate on this legislation have we been privileged to hear her voice. Hers is the responsibility for the change. It is the responsibility of the Government and of the Secretary of State. They are proceeding with insensitivity with a measure which is deplorable because it is destructive and discriminatory against one class of the community.
I withdraw not one word of my charge against the Government in my opening remarks. This is more a matter of human feelings than one of simple figures, and the Government have failed to respond to the strength of that case. I call upon my right hon. and hon. Friends to carry that conviction into the Division Lobby.

Question put, That the Amendment be made:—

The House divided: Ayes 264, Noes 284.

Division No. 16.]
AYES
[9.53 p.m.


Adley, Robert
Gardner, Edward (S Fylde)
Maudling, Rt Hon Reginald


Aitken, J. W. P.
Gilmour, Rt Hon Ian (Chesham)
Mawby, Ray


Alison, Michael
Gilmour, Sir John (East Fife)
Maxwell-Hyslop, Robin


Arnold, Tom
Giyn, Dr Alan
Mayhew, Patrick


Atkins, Rt Hn H. (Spelthorne)
Godber, Rt Hon Joseph
Meyer, Sir Anthony


Awdry, Daniel
Goodhart, Philip
Miller, Hal (Bromsgrove)


Bain, Mrs Margaret
Goodhew, Victor
Mills, Peter


Banks, Robert
Goodlad, A.
Miscampbell, Norman


Beith, A. J.
Gow, I. (Eastbourne)
Mitchell, David (Basingstoke)


Bell Ronald
Gower, Sir Raymond (Barry)
Moate, Roger


Bennett, Sir Frederic (Torbay)
Gray, Hamish
Monro, Hector


Bennett, Dr Reginald (Fareham)
Griffiths, Eldon
Montgomery, Fergus


Benyon, W. R.
Grist, Ian
Moore, John (Croydon C)


Berry, Hon Anthony
Hall, Sir John
More, Jasper (Ludlow)


Biffen, John
Hall-Davis, A. G. F.
Morgan, Geraint


Biggs-Davison, John
Hamilton, Michael (Salisbury)
Morgan-Giles, Rear-Admiral


Blaker, Peter
Hampson, Dr Keith
Morris, Michael (Northants)


Body, Richard
Hannam, John
Morrison, Charles (Devizes)


Boscawen, Hon Robert
Harrison, Sir Harwood (Eye)
Morrison, Peter (Chester)


Bowden, Andrew (Brighton)
Harvie Anderson, Rt Hn Miss
Mudd, David


Boyson, Dr Rhodes (Brent)
Hastings, Stephen
Neave, Airey


Bradford, Rev Robert
Havers, Sir Michael
Nelson, Anthony


Braine, Sir Bernard
Hawkins, Paul
Neubert, Michael


Brittan, Leon
Hayhoe, Barney
Newton, Tony


Brotherton, Michael
Heath, Rt Hon Edward
Normanton, Tom


Brown, Sir Edward (Bath)
Heseltine, Michael
Nott, John


Bryan, Sir Paul
Hicks, Robert
Onslow, Cranley


Buchanan-Smith, Alick
Higgins, Terence L.
Oppenheim, Mrs Sally


Buck, Antony
Holland, Philip
Page John (Harrow West)


Budgen, Nick
Hooson, Emlyn
Parkinson, Cecil


Bulmer, Esmond
Hordern, Peter
Pattie Geoffrey


Carlisle, Mark
Howe, Rt Hon Sir Geoffrey
Penhaligon David


Carr, Rt Hon Robert
Howell, David (Guildford)
Percival Ian


Chalker, Mrs Lynda
Howell, Ralph (North Norfolk)
Peyton Rt Hon John


Channon, Paul
Howells, Geraint (Cardigan)
Pink R. Bonner


Churchill, W. S.
Hunt, John
Powell, Rt Hon J. Enoch


Clark, Alan (Plymouth, S)
Hurd, Douglas
price David (Eastleigh)


Clark, William (Croydon S)
Hutchison, Michael Clark
Prior, Rt Hon James


Clarke, Kenneth (Rushcliffe)
Irvine, Bryant Godman (Rye)
Pym, Rt Hon Francis


Cockcroft, John
Irving, Charles (Cheltenham)
Raison Timothy


Cooke, Robert (Bristol W)
James, David
Rathbone Tim


Cope, John
Jenkin, Rt Hon Patrick (Redbr)
Rawlinson, Rt Hon Sir Peter


Cormack, Patrick
Jessel, Toby
Rees Peter (Dover &amp; Deal)


Corrie, John
Johnson Smith, G. (E Grinstead)
Rees-Davies W. R.


Costain, A. P.
Jones, Arthur (Daventry)
Reid, George


Craig, Rt Hon W. (Belfast)
Joseph, Rt Hon Sir Keith
Renton, Rt Hn Sir D. (Hunts)


Crawford, Douglas
Kaberry, Sir Donald
Renton, Tim (Mid-Sussex)


Critchley, Julian
Kellett-Bowman, Mrs Elaine
Ridley, Hon Nicholas


Crouch, David
Kilfedder, James
Ridsdale Julian


Crowder, F. P.
Kimball, Marcus
Rifkind, Malcolm


Davies, Rt Hon J. (Knutsford)
King, Evelyn (South Dorset)
Roberts, Michael (Cardiff NW)


Dodsworth, Geoffrey
King, Tom (Bridgwater)
Roberts, Wyn (Conway)


Douglas-Hamilton, Lord James
Kirk, Peter
Ross, Stephen (Isle of Wight)


du Cann, Rt Hon Edward
Kitson, Sir Timothy
Ross, William (Londonderry)


Dunlop, J.
Knight, Mrs Jill
Rossi Hugh (Hornsey)


Durant, Tony
Knox, David
Rost, peter (SE Derbyshire)


Eden, Rt Hon Sir John
Lamont, Norman
Sainsbury, Tim


Edwards, Nicholas (Pembroke)
Lane, David
Scott-Hopkins, James


Elliott, Sir William
Langford-Holt, Sir John
Shaw, Giles (Pudsey)


Emery, Peter
Latham, Michael (Melton)
Shelton, William (Lambeth, St)


Ewing, Mrs Winifred (Mora[...])
Lawson, Nigel
Shepherd, Colin


Eyre, Reginald
Le Marchant, Spencer
Silvester, Fred


Fairbairn, Nicholas
Lester, Jim (Beeston)
Sims, Roger


Fairgrieve, Russell
Lloyd, Ian (Havant)
Sinclair, Sir George


Farr, John
Loveridge, John
Skeet, T. H. H.


Fell, Anthony
Luce, Richard
Smith, Cyril (Rochdale)


Finsberg, Geoffrey
McAdden, Sir Stephen
Smith, Dudley (Warwick)


Fisher, Sir Nigel
MacCormick, lain
Spence, John


Fletcher, Alex (Edinburgh N)
McCrindle, Robert
Spicer, James (W Dorset)


Fletcher-Cooke, Charles
McCusker, Harold
Spicer, Michael (S Worcester)


Fookes, Miss Janet
Macfarlane, Nell
Sproat, lain


Fowler, Norman (Sutton C)
MacGregor, John
Stainton Keith


Fox, Marcus
Macmillan, Rt Hn M. (Farnham)
Stanbrook, Ivor


Fraser, Rt Hon H. (Stafford &amp; St)
McNair-Wilson, P. (New Forest)
Stanley, John


Freud, Clement
Madel, David
Steel, David (Roxburgh)


Fry, Peter
Marshall, Michael (Arundel)
Steen, Anthony (Liverpool)


Galbraith, Hon T. G. D.
Mates, Michael
Stewart, Donald (Western Isles)


Gardiner, George (Reigate)
Maude, Angus
Stewart, Ian (Hitchin)




Stokes, John
Vaughan, Dr Gerard
Whitelaw, Rt Hon William


Tapsell, Peter
Viggers, P. J.
Wiggin, Jerry (Weston-s-Mare)


Taylor, R. (Croydon NW)
Wainwright, Richard (Colne V)
Wilson, Gordon (Dundee E)


Taylor, Teddy (Glasgow, C)
Wakeham, John
Winterton, Nicholas


Temple-Morris, P.
Walker Rt Hon P. (Worcester)
Wood, Rt Hon Richard


Thatcher, Rt Hon M.
Walker-Smith, Rt Hon Sir Derek
Young, Sir George (Ealing)


Thompson, George
Walters, Dennis
Younger, Hon George


Townsend, Cyril D.
Warren, Kenneth



Trotter, Neville
Weatherill, Bernard
TELLERS FOR THE AYES:


Tugendhat, Christopher
Wells, John
Mr. Adam Butler and


van Straubenzee, W. R.
Welsh, Andrew
Mr. John Stradling Thomas,




NOES


Abse, Leo
Dormand, Jack
Judd, Frank


Allaun, Frank
Douglas-Mann, Bruce
Kaufman, Gerald


Anderson, Donald
Duffy, A. E. P.
Kelley, Richard


Archer, Peter
Dunn, James A.
Kerr, Russell


Armstrong, Ernest
Dunnett, Jack
Kilroy-Silk, Robert


Ashley, Jack
Dunwoody, Mrs. Gwyneth
Kinnock, Neil


Ashton, Joe
Eadie, Alex
Lambie, David


Atkins, Ronald (Preston N)
Edelman, Maurice
Lamborn, Harry


Atkinson, Norman
Edge, Geoffrey
Lamond, James


Bagier, Gordon A. T.
Edwards, Robert (Wolv SE)
Latham, Arthur (Paddington)


Barnett, Guy (Greenwich)
Ellis, John (Brigg &amp; Scun)
Leadbitter, Ted


Barnett, Joel (Heywood)
Ellis, Tom (Wrexham)
Lee, John


Bates, Alt
English, Michael
Lestor, Miss Joan (Eton &amp; Slough)


Bean, Robert E.
Evans, Fred (Caerphilly)
Lever, Rt Hn Harold


Benn, Rt Hn Anthony Wedgwood
Evans, loan L. (Aberdare)
Lewis, Ron (Carlisle)


Bennett, Andrew (Stockport N)
Evans, John (Newton)
Lipton, Marcus


Bidwell, Sydney
Ewing, Harry (Stirling)
Litterick, Tom


Bishop, Edward
Faulds, Andrew
Lomas, Kenneth


Blenkinsop, Arthur
Fernyhough, Rt Hon E.
Loyden, Eddie


Boardman, H.
Fitch, Alan (Wigan)
Luard, Evan


Booth, Albert
Fitt, Gerard (Belfast)
Lyon, Alexander (York)


Boothroyd, Miss Betty
Flannery, Martin
Lyons, Edward (Bradford W)


Bottomley, Rt Hon Arthur
Fletcher, Ted (Darlington)
McCartney, Hugh


Boyden, James (Bish Auck)
Foot, Rt Hon Michael
McElhone, Frank


Bradley, Tom
Ford, Ben T.
MacFarquhar, R.


Bray, Dr Jeremy
Forrester, John
Mackenzie, Gregor


Broughton, Sir Alfred
Fowler, Gerald (The Wrekin)
Mackintosh, John P.


Brown, Hugh D. (Glasgow, Pr)
Fraser, John (Lambeth, N)
Maclennan, Robert


Brown, Robert C. (Newcastle)
Freeson, Reginald
McMillan, Tom (Glasgow C.)


Brown, Ronald (Hackney S)
Garrett, John (Norwich S)
McNamara, Kevin


Buchan, Norman
Garrett, W. E. (Wallsend)
Madden, Max


Buchanan, Richard
George, Bruce
Magee, Bryan


Butler, Mrs Joyce (Haringey)
Gilbert, Dr John
Mahon, Simon


Callaghan, Jim (Middleton &amp; P)
Ginsburg, David
Mallalieu, J. P. W.


Campbell, Ian
Golding, John
Marks, Ken


Canavan, Dennis
Gould, Bryan
Marquand, David


Cant, R. B.
Gourlay, Harry
Marshall, Dr Edmund (Goole)


Carmichael, Nell
Graham, Ted
Marshall, Jim (Leicester)


Carter, Ray
Grant, George (Morpeth)
Mason, Rt Hon Roy


Carter-Jones, Lewis
Grocott, Bruce
Maynard, Miss Joan


Cartwright, John
Hamilton, James (Bothwell)
Meacher, Michael


Castle, Rt Hon Barbara
Hamilton, W. W. (Central Fife)
Mellish, Rt Hon Robert


Clemitson, I. M.
Hamling, William
Mendelson, John


Cocks, Michael (Bristol S)
Hardy, Peter
Mikardo, Ian


Cohen, Stanley
Harper, Joseph
Millan, Bruce


Coleman, Donald
Harrison, Walter (Wakefleld)
Miller, Mrs Millie (Redbridge)


Colquhoun, Mrs Maureen
Hart, Rt Hon Judith
Molloy, William


Conlan, Bernard
Hatton, Frank
Moonman, Eric


Cook, Robin F. (Edln C)
Hayman, Mrs H.
Morris, Alfred (Wythenshawe)


Corbett, Robin
Healey, Rt Hon Denis
Morris, Charles R. (Openshaw)


Cox, Thomas (Wands, Toot)
Heffer, Eric S.
Morris, Rt Hon John (Aberavon)


Craigen, J. M. (Glasgow, M)
Hooley, Frank
Mulley, Rt Hon Frederick


Crawshaw, Richard
Horam, John
Newens, Stanley


Crosland, Rt Hon Anthony
Huckfield, Leslie
Noble, Mike


Cryer, Bob
Hughes, Rt Hon C. (Anglesey)
Ogden, Eric


Cunningham, G. (Islington S)
Hughes, Robert (Aberdeen N)
O'Halloran, Michael


Cunningham, Dr J. (Whiteh)
Hunter, Adam
O'Malley, Brian


Dalyell, Tarn
Irvine, Rt Hon Sir A. (L'pool)
Orbach, Maurice


Davidson, Arthur
Irving, Rt Hon S. (Dartford)
Orme, Rt Hn Stanley


Davies, Bryan (Enfield N)
Jackson, Colin (Brighouse)
Ovenden, John


Davies, Denzil (Llanelli)
Jackson, Miss Margaret (Lincoln)
Owen, Dr David


Davies, Ifor (Gower)
Janner, Greville
Palmer, Arthur


Davis, S. Clinton (Hackney C)
Jay, Rt Hon Douglas
Park, George


Deakins, Eric
Jeger, Mrs Lena
Parry, Robert


Dean, Joseph (Leeds West)
Jenkins, Hugh (Wandsworth)
Peart, Rt Hon Fred


de Freitas, Rt Hon Sir Geoffrey
John, Brynmor
Pendry, Tom


Delargy, Hugh
Johnson, James (Kingston W)
Perry, Ernest


Dell, Rt Hon Edmund
Jones, Barry (East Flint)
Phipps, Dr Colin


Dempsey, James
Jones, Dan (Burnley)
Prentice, Rt Hon Reg


Doig, Peter
Jones, Alec (Rhondda)
Prescott, John







Price, William (Rugby)
Snape, Peter
Watkins, David


Radice, Giles
Spearing, Nigel
Watkinson, John


Richardson, Miss Jo
Spriggs, Leslie
Weetch, Ken


Roberts, Albert (Normanton)
Stewart, Rt Hn Michael (H'smith, F)
Weitzman, David


Roberts, Gwilym (Cannock)
Stoddart, David
Wellbeloved, James


Roderick, Caerwyn
Stott, Roger
White, Frank R. (Bury)


Rodgers, George (Chorley)
Strang, Gavin
White, James (Glasgow, P)


Rooker, J. W.
Strauss, Rt Hon G. R.
Whitehead, Phillip


Roper, John
Summerskill, Hon Dr Shirley.
Whitlock, William


Ross, Rt Hon W. (Kilm'nock)
Swain, Thomas
Willey, Rt Hon Frederick


Rowlands, Ted
Thomas, Dafydd (Merioneth)
Williams, Alan (Swansea)


Ryman, John
Thomas, Jeffrey (Abertillery)
Williams, Alan, Lee (Haver'g)


Sandelson, Neville
Thomas, Mike (Newcastle)
Williams, Rt Hn Shirley (Hertford)


Sedgemore, B.
Thomas, Ron (Bristol NW)
Williams, W. T. (Warrington)


Shaw, Arnold (Redbridge, llf)
Thorne, Stan (Preston)
Wilson, Alexander (Hamilton)


Sheldon, Robert (Ashton-u-Lyne)
Tierney, Sydney
Wilson, Rt Hon H. (Huyton)


Shore, Rt Hon Peter
Tinn, James
Wilson, William (Coventry SE)


Short, Rt Hon Edward (Newcastle C)
Tomlinson, John
Wise, Mrs Audrey


Short, Mrs Renee (Wolv NE)
Tuck, Raphael
Woodall, Alec


Silkin, Rt Hn John (Lewish)
Urwln, T. W.
Woof, Robert


Silkin, Rt Hn S. C. (Southwk)
Varley, Rt Hon Eric G.
Wrigglesworth, Ian


Sillars, James
Wainwright, Edwin (Dearne V)
Young, David (Bolton E)


Silverman, Julius
Walden, Brian (B'ham, L'dyw'd)



Skinner, Dennis
Walker, Harold (Doncaster)
TELLERS FOR THE NOES


Small, William
Walker, Terry (Kingswood)
Mr. Walter Johnson and


Smith, John (N Lanarkshire)
Ward, Michael
Mr. Laurie Pavitt.

Question accordingly negatived.

BUSINESS OF THE HOUSE

Ordered,
That the Social Security Amendment Bill may be proceeded with at this day's sitting, though opposed, until any hour.— [Mr. Thomas Cox.]

SOCIAL SECURITY AMENDMENT BILL

Motion made, and Question proposed, That the Bill be now read the Third time.

10.7 p.m.

Sir G. Howe: We have spent the whole of today debating the Bill. I want to make only a few concluding observations about it.
Throughout our proceedings, the Opposition have always made clear their welcome for the improvement in benefits which the Bill is designed to produce. We have always made it clear that our concern was in no way designed to jeopardise the National Insurance Fund or the financing of these increased pensions. But we have been expressing two matters of deep concern where we still believe that the Government have made serious mistakes in terms of human justice and of political judgment.
The Government's decision to use the Bill as a means of whittling away the married women's option by increasing the percentage contribution payable by married women from 0·6 per cent. to 2

per cent. is from our point of view a mistake that will work gravely to the disadvantage of those 5 million married women who go out to work and who have currently taken advantage of this position.
We do not think that this is a fair deal for them. We shall continue to argue the case against it and to press it as hard as we can. We shall continue to resist the Government's intention to abolish the married women's option, because we think it will be bad for the women and bad for the economy of this country.
The second point of our concern is the matter that we have just finished debating—the increase in the burden on the self-employed. This too, we believe, represents an error of judgment at a time when the Government ought to have been striving to respond to representations of the kind that have been made on behalf of one group in the community. We regard it as a matter of great regret that although these arguments have been canvassed since the Bill was first published and debated in the House in July, the Government have not been able to move one inch towards meeting the arguments. These are arguments which deserve more sympathetic consideration than they have received. It is a matter of great regret that the Government have sought to deal with them in this way.
It has also been a matter of some regret that the Government went ahead, before the Bill had passed through the House, in distributing up and down the


country leaflets and literature describing the way in which this legislative scheme would work even before they had parliamentary approval for the scheme. I know that they included the cautionary phrase, "subject to parliamentary approval". In relation to the changes affecting the self-employed we believe that that was a regrettable thing for them to do.
However, that action was characteristic of the Government's attitude throughout. They have not responded to the reasonable representations of the House of Commons. We shall hops that on any future occasion when we are able to discuss social security matters the Government will be more forthcoming than they have been on this occasion. Outside the House not many weeks ago they appealed for a co-operative approach to the second pension when legislation for that comes forward. It is not a good omen for co-operation on that that the Government have shown themselves so unwilling to co-operate in the debates on this Bill. We ourselves will do our best to respond more co-operatively, but we cannot but deplore the way in which the Government have handled these proceedings.

10.11 p.m.

Mr. Raphael Tuck: On the last amendment, on Report, I raised two points which perhaps I should not have raised then as they did not strictly apply to the amendment. Accordingly, I raise them now.
First, I asked the Minister to do his best in the ensuing year or two to evolve a system whereby we have earnings-related contributions and earnings-related benefits.
The second is a point on which the Bill runs absolutely riot. The level of earnings below which a person liable for class II contributions may seek exemption from liability is set at £675 a year. That means that the contribution of £2·41, which is about £125 a year, is not payable by a person earning £674 a year or under. The minute one earns £675 one must pay £2·41, so for that extra £1 one must pay £125 a year. That means that a person earning between £675 and £800 is less well off after this deduction than if he had been earning only £674. I hope that my hon. Friend will try to resolve this difficulty.

10.12 p.m.

Mr. O'Malley: The purpose of the Bill was to establish a level of contribution which would finance the payment of the higher levels of pensions implemented by the Government. The first increase, which was one of 29 per cent., came in July of this year. My right hon. Friend the Chancellor of the Exchequer has already announced—indeed, we have had the Second Reading of the Bill which brings forward—further increases in April and an increase which is promised for December 1975.
Had we left the contribution levels of the Social Security Act 1973 unamended, we would have been able to pay in real terms pensions only at about the £6·75 level which was the then level of pensions operative during the passage of the 1973 Act.
Therefore, the Government make no apologies to the House or to the country for the new higher levels of contribution. We believe that as a matter of high priority pensioners needed, as indeed they have got, substantial benefits within the first five months of the accession to power of the Labour Government in 1974.
I understand the strong feelings which have been evident throughout the country regarding the new system or class 2 and class 4 contributions for the self-employed. I stress now, as I did in the debate on the last amendment, that in this Bill we are updating a structure that we inherited from the previous Tory Government and changing it in only one respect. We were not prepared to increase the class 2 contributions to any higher rate than that set out in the Bill, because we felt it to be important to have regard for those self-employed persons, who probably number between one-third and one-half of the total, who have incomes, on the best information available to us, of under £1,600 a year.
The Opposition have felt strongly on the question of the level of contributions of 2 per cent. set for married women. However, it remains the fact that as from April next the generality of married women in employment will pay contributions much below the total level of contribution they are now paying.
The Government took the view that at a time when the number of pensioners had risen to 8· million, while the working population was not rising at anything like


that rate, married women should be asked to pay a level of contributions higher than the 0·6 per cent. in the Social Security Act. We therefore set the figure at 2 per cent. Had we not decided to raise the £47 million that we are raising from that source the burden on employed men, married and single, and on single employed women would have been higher.
The right hon. and learned Member for Surrey, East (Sir G. Howe) complained that the Government put out literature on the Bill before it received parliamentary approval. But, as he acknowledged, the literature pointed out that the proposals were subject to parliamentary approval. I make two points on this. First, there was a precedent set by the previous Conservative administration, which acted in a similar manner before legislation had passed through the House. Secondly, it has not been a usual situation in this country to have had biannual General Elections, and I hope that this will not become a regular pattern. In this case there were special circumstances. Arising from the legislation of the previous administration we were moving into a completely new system of contributions, namely fully earnings-related contributions in respect of class 1 contributors, involving both primary and secondary contributions.
I shall now try to deal with questions asked by my hon. Friend the Member for Watford (Mr. Tuck). First, he queried the base level of £675 a year, below which there is exemption from payment of national insurance contributions. I accept the point—a hypothetical point— which my hon. Friend made, but nevertheless it could arise in some circumstances. There is always a difficulty that wherever a level is set there must be a threshold below which there is no obliga-

tion to pay national insurance contributions. There is a threshold in respect of class 1 contributors. Wherever the line is placed there must be a section that falls below the threshold.
Of course my hon. Friend is right in believing that it would be far more satisfactory if we were to have a fully earnings-related system of contributions, and I am sure that all Governments would want to keep this under continual consideration. But so far, as is reflected in the terms of the Bill, it has been impossible to do what my hon. Friend suggests.
In conclusion, I wish to thank my hon. Friends and right hon. and hon. Gentlemen on the Opposition Front Bench and back benches who have spent time discussing the Bill and its proposals in detail during the Committee stage. The time is now short before the start of the new system of contributions. Leaflets have been distributed giving information about the system and we are anxious that employers go ahead with their preparations so that there is a smooth start to the new earnings-related contributions, as from April 1975.
I hope that employers with queries or difficulties will consult local offices of the Department, which will deal with any points that arise.
The Bill makes possible the payment of the better pensions to which this Government are firmly committed, and I am therefore pleased to have reached the stage at which I hope in a few moments there will be a Third Reading for a Bill with such beneficial purposes.

Question put and agreed to.

Bill accordingly read the Third time and passed.

SOCIAL SECURITY (CONTRIBUTIONS)

10.20 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): I beg to move,
That the Social Security (Contributions) Amendment (No. 2) Regulations 1974, a draft of which was laid before this House on 30th October, be approved.
At the outset may I say that I have considerable sympathy with all those who have sought to understand the regulations but, through the good offices of my Department, I will do my best to explain them in as simple language as is humanly possible.
First, I should like to state the purpose of the regulations. These regulations further amend and add to the principal regulations, the Social Security (Contribution) Regulations 1973 which were made on 20th July that year. The principal regulations were first amended by the Social Security (Contribution) Amendment Regulations 1974 which were made on 7th June 1974. The regulations, which do not contain any provisions about benefits, need to be made now to enable employers to be given detailed guidance in time for them to plan for the changeover in April 1975 to the new system of calculating and collecting social security contributions.
The proposed regulations add provisions which prescribe liability for special class 4 contributions for certain persons who are treated by regulations as self-employed. They provide the special rules governing liability for contributions in respect of airmen, mariners and members of the forces and prescribe the conditions of residence or presence in Great Britain for liability or entitlement to pay contributions. They also specify the conditions as to liability or entitlement to pay contributions of persons going abroad or coming to this country from abroad. They also contain tables setting out the weekly and monthly scales of contributions applicable to mariners and members of the forces. These tables are based on the rates set out in the 1973 Act. They will be revised as soon as possible to bring them in line with the rates approved by Parliament when the

Social Security Amendment Bill which we have recently been discussing becomes law.
The regulations are made under various provisions of the Social Security Act 1974. It may help the House if I deal with each of the three main subjects of the regulations in turn, explaining the broad principles on which they are based and how they will operate in practice.
Provisions dealing with the liability of the generality of self-employed persons for class 4 contributions have already been made in an earlier set of regulations. The contributions are to be levied on profits or gains within specified limits chargeable to income tax under Schedule D. The regulations now before the House add to those provisions and impose a liability for persons who, as a class, are treated by regulations under Section 1(8)(b) of the 1973 Act as self-employed but whose earnings are chargeable to income tax under Schedule E. Because of the different tax schedule, such contributions could not be assessed and collected by the ordinary method and they would be specially dealt with by my Department and not the Inland Revenue. For that reason they have been referred to as special class 4 contributions. There is otherwise nothing in their nature which differentiates them from other class 4 contributions.
I should add that so far no regulations have been made designating any classes of persons to whom these provisions would apply. No regulations have as yet been made which have the effect of bringing persons into liability for special class 4 contributions and, so far as can be foreseen, the only class which will be prescribed is the clergy.
I turn to the special categories of earners. Schedule B of the regulations adds a new Part VIII to the principal regulations. The Schedule is sub-divided into four cases, A, B, C and D. The first three, A, B and C, provide the special arrangements which have always been recognised as necessary to cater for the unusual conditions of employment of airmen, mariners and members of the forces. Case B also contains provisions aimed at achieving a smooth change over to the new scheme for mariners whose pay and national insurance contributions are settled at the end of the voyage and who are on


a voyage on the day when the new arrangements begin. About half the mariners are paid this way. The other half are paid weekly or monthly and can be assimilated in the new scheme in the same way as other employees.
The regulations provide for special rates of contributions to be payable in the case of members of the forces and mariners. In the case of members of the forces, both the employer's and the employee's rate of contribution will be reduced to reflect the fact that, while serving, forces personnel are debarred from receiving sickness and unemployment benefits and do not come within the scope of the industrial injuries scheme. In addition, as members of the forces are not covered by the Redundancy Payments Act, the employer's rate will be reduced by the 0·2 per cent. which is included in the ordinary employer's contribution for that purpose.
Mariners themselves will pay the same rates of contribution as any other employees, but their employers' rate may be reduced in two ways. First, for all mariners who come within the scope of the Redundancy Payments (Merchant Seamen Exclusion) Order 1973, the rate will be reduced by the 0·2 per cent. redundancy fund contribution. Secondly, for mariners employed on foreign-going ships there will be a further reduction in recognition of the special responsibilities which are placed on shipowners by the Merchant Shipping Acts for the medical care and maintenance of mariners during incapacity for work in the course of a voyage. All these reductions have been carefully calculated by the Government Actuary and the parties concerned have indicated to my officials that they are acceptable. They are based on the principles on which similar reductions in contribution liability have operated under the present schemes for many years.
Although the regulations for the special groups in general follow the principles established under the National Insurance Acts and carry forward to the new social security scheme the special arrangements at present in force, there are some differences which require explanation.
The first of these changes relates to non-domiciled airmen and mariners. Under the present scheme, British-based

employers of non-domiciled airmen and mariners on home-trade ships are required to pay the employer's share of the flatrate national insurance contribution for each such person in their employ. For non-domiciled mariners on foreign-going ships the employer pays a half-rate contribution except where the ship trades exclusively outside home waters. The employees themselves pay nothing, as is proper since they have only fleeting connections with this country and could not build up entitlement to benefit under our schemes.
We have discussed these long-standing provisions with both sides of the industries concerned and have agreed that the time has come when they may be abolished without detriment to the interests of the employees in those industries who are resident or domiciled in this country. This is without prejudice to the arrangements entered into under the terms of reciprocal agreements with other countries over the years and to the obligations acquired under the ILO Conventions to provide cover for industrial injuries benefits for the nationals of certain specified countries.
The provisions for members of the forces differ from the existing regulations as they affect members of the reserve forces and certain married Service women.
I will deal with reservists first. The provisions secure that in contrast to the present graduated contribution arrangements, the reservist's Service pay which he receives when undergoing training will be taken into account for assessing earnings-related contributions. This is to ensure that during the more substantial periods of training basic benefit rights will be protected. Under the present scheme this is achieved by the payment of flat-rate contributions. Because of the differing pay practices of the Services, contributions will be calculated on an assumed pay interval of a month, thereby avoiding any inequities in liability as between one group of reservists and another. The effect of the new arrangements will be that contributions will be payable on reservists' pay for a month in which a substantiial period of service has been rendered. In practice, this will usually occur at the time of annual camp training.
Married Service women who have opted not to pay national insurance contributions pay no flat-rate contributions at all at present since they are excluded from industrial injuries cover. Under the Social Security Act the reduced rate available to married women also includes an allocation to the National Health Service which it is considered equitable that the married Service woman should also pay. Accordingly, if she so elects, she will pay reduced rate contributions, but at a rate which recognises her exclusion from industrial injuries benefits.
I will next deal with residence and persons abroad. Case D of the regulations prescribes the conditions as to residence or presence in Great Britain which employees, employers and other contributors are required to fulfil in relation to liability or entitlement to pay contributions. Apart from a few differences in detail, the regulations closely follow those of the present national insurance scheme.
Briefly, the general effect of the residence or presence provision is that liability of an employee to pay a contribution will be dependent on his being resident or present in Great Britain at the time of the employment, and the liability of his employer will be dependent on the employer's being resident or present or having a place of business here—though he will be able to pay if he wishes. There will, however, be no liability on either party during the first 52 weeks if the employee is not ordinarily resident here and is sent here by a foreign employer in pursuance of employment mainly carried on abroad.
A self-employed person will be liable to pay class 2 contributions if he is ordinarily resident in Great Britain or if he has been present in the country for 26 of the last 52 weeks. He may, however, if he wishes, pay such a contribution for any week he is present in Great Britain. Entitlement to pay the voluntary class 3 contribution will depend on a person's having been present in Great Britain at any time during the course of the year.
I will deal next with payment of contributions for persons sent to work abroad. The present provision that liability for class 1 contributions shall continue for 52 weeks in respect of per-

sons who are ordinarily resident here and who go to work abroad for an employer with a place of business in this country is carried forward to the new scheme, but, unlike the present arrangements, liability will not be conditional on the work abroad being in continuation of class 1 employment in this country. This condition is not being retained because of a number of difficulties which arose from its administration—where, for example, there was a gap between the ending of the employment in this country and the start of employment abroad or the person was not an employed person before going abroad. Persons who remain abroad beyond the period for which class 1 contributions are paid will be entitled to pay class 3 contributions, if they wish to do so, in order to safeguard entitlement to long-term benefits.
I turn now to class 2 and class 3 contributions for periods spent abroad. The regulations make provision for the voluntary payment of class 2 and class 3 contributions by other persons abroad who satisfy the comparatively easy tests of three years' continuous past residence in Great Britain or previous payment of contributions equivalent to three years of insurance under this country's national insurance provisions. The tests are similar to those used at present. The regulations also specify the time limit within which these contributions must be paid, applying to persons abroad the same time limit as will apply to most persons in Great Britain, that is, the end of the second tax year following the year in respect of which the contributions are paid. The present limit, both for persons in Great Britain and for those abroad, is six years.
There is also a transitional provision applying to persons who are already employed abroad at the time the new Act comes into force. This ensures that no new liability is imposed on persons already abroad or on their employers where no liability exists under the National Insurance Acts, but provides that where liability exists under the present scheme it shall continue under the new scheme until the end of the appropriate period of employment abroad. The regulation also provides that persons abroad who are entitled to pay contributions voluntarily under the present Act may pay such contributions after 5th April 1975 provided they are


paid within the time limit for such contributions under the present Act or before 6th April 1978, whichever is the earlier.
These regulations have been examined by the Joint Committee on Statutory Instruments. The Committee offered no comment and approved the regulations. I hope that the House will speedily do the same tonight.

10.37 p.m.

Mr. Kenneth Clarke: I am grateful to the Minister for trying to give the House an explanation of these incredibly complicated regulations. I have sympathy with him and those who had to advise him in their attempts to make them intelligible. He read a well-prepared brief impeccably. It is no fault of his that the House has practically emptied in the course of this business.
The regulations are an impenetrable maze. Even though the Minister was kind enough to give me a brief before he started, I shall later read with interest what he has said and study it carefully. One cannot help feeling that one of the snags of the national health system is that tucked away in these regulations, for example, may be the beginning of a worrying constituency case in which a constituent manages to acquire an incredibly complicated contribution which brings him within the terms of the regulations. One knows only too well that on taking up the case the Minister or the Under-Secretary of State is obliged to send back an extremely lengthy letter in another attempt to make clear the regulations relating, for example, to the contributions of people who are employed abroad or who have been mariners.
Part of the regulations relates to the difficult process of trying to sort out the self-employed from the employed. That has been a desperate problem under the national insurance system for a long time, and it has become more difficult. There are many anomalies, and the borderline between employment and self-employment has proved extremely difficult to sort out over the years. For example, until the changes were made in 1973 Members of Parliament were regarded as employed for the purpose of tax but self-employed for the purpose of the national insurance system. Taxi drivers have already been referred to today. Those

who are bailees are self-employed for tax purposes but employed for national insurance purposes under the present arrangements.
The Social Security Act 1973 made an attempt to define the difference between employed and self-employed. Sections 1(8), 1(9) and 5 of the Act gave the power to make regulations which would make the borderline clearer. It is clear from the regulations now before the House that that has not been entirely successful. Already the regulations have been amended twice this year. The first amendment was made earlier this year. It was sought to make certain people liable to class 4 contributions over and above any class 1 contributions they had already paid as employed persons, with suitable abatement of the class 4 contribution.
The regulations seek to establish a new special class 4 contribution for various people who would normally have been treated as employed persons but who are by regulation to be treated as self-employed.
Will the Minister make clear why we are continually amending the 1973 regulations? Will he also describe, in terms that might bring them to life a little more, which groups of people we are trying to deal with in these repeated amendments? The regulations seem to bring more people over from the employed into the self-employed category, which in view of the legislation which has just been passed is bringing in more victims to the Government's treatment of the self-employed for national insurance purposes. Which groups of people have not so far been covered and are now to be covered by being made liable to special class 4 contributions?
I realise that the Minister cannot hope to give me the comprehensive list. However, perhaps he can give one or two examples of the category of employment that will be paying this new special class 4 contribution, in order to shed more light on the difficulties that we are having in drawing the borderline between employed and self-employed.
Do these regulations finally sort out the anomalies that can arise under the new regulations following the Social Security Act 1973? After these regulations, will there still be people not paying


Schedule D tax? Will there still be some categories paying PAYE Schedule E tax who will be treated as self-employed for the purpose of national insurance? Have these regulations failed to remove the anomalies whereby more people continue to be employed for tax purposes and self-employed for national insurance purposes?
Given that the regulations try to govern the borderline between employed and self-employed people, is it the position that those who wish to do so can still exercise the option, by agreement with the Department, as to the category to which they should belong for the purpose of national insurance?
In an earlier debate, the Minister of State implied that clergymen would still be able to opt as a body whether they were to be regarded as self-employed or employed persons. I gather that the Church authorities have for the time being opted to have their clergy treated as self-employed but reserve the right at a later stage to consider whether they might become employed persons for the purpose of national insurance when what I might call the Castle White Paper gets near to taking legislative form.
I understand that clergymen are not the only group which, as a group, can opt. I believe that some individuals may opt whether they are employed or self-employed for the purpose of national insurance.
I am open to correction, but I understand that a director of a family company is entitled to opt whether he is employed or self-employed. Do the regulations, or any of them, infringe that freedom of action by, say, a director of a family company to decide whether he wants to pay his tax as an employed or self-employed person?
Finally, in deciding whether individual categories are employed or self-employed for the purpose of national insurance, I again refer to taxi drivers. My hon. Friend the Member for Hampstead (Mr. Finsberg) has forwarded to me the representations he has had from the Licensed Taxi Drivers' Association. At the moment taxi drivers are self-employed for tax purposes, but if they are bailees working for a taxi proprietor they are employed persons for national insurance purposes.

Taxi drivers as a body have discovered that they are to become self-employed persons for national insurance contributions.
In view of what the Government are doing about self-employed contributions, taxi drivers are somewhat concerned. They believe that the problem arises from the Social Security Act 1973. I am not convinced of that, although the Minister of State sounded earlier as though he was supporting that proposition. It seems that this arises out of some of these regulations and that regulations have been made by the Goxernment defining taxi drivers as self-employed for future reference. Is that the case, or will taxi drivers as a body, be able to choose after making representations, whether they are to be self-employed or employed from April 1975 onwards?
At the moment the elderly self-employed are exempt from national insurance contributions if they are above pensionable age and if they retire within the circumstances set out under Regulation 62 (2) of the regulations now before us. By Regulation 50 any elderly self-employed person appears to be exempt from national insurance contributions, even if he has not retired, if he is more than five years over pensionable age. If that is so, anyone over the age of 70 pays no class 4 contributions even if he is still working and is self-employed.
In view of the representations the Minister has been receiving on behalf of the self-employed, I wonder whether these regulations could be extended so that all those over pensionable age—all over 65 who are self-employed might be relieved from graduated class 4 contributions. Is is right that at the moment they become exempt when they are more than five years over pensionable age even if they are not retired? If so, could not this be extended to those over pensionable age as a body?
I would like the Under-Secretary to say something about the record of contributions made by the self-employed. In reading his speech and studying the regulations the hon. Gentleman may have noticed that Regulation 62 makes a small provision about the record which is kept of contributions made by the self-employed. In these regulations a special class 4 contribution is to be administered


by the Secretary of State and not by the Inland Revenue as in the case of other class 4 contributions. What is the reason for this? I wonder whether these regulations are a way of trying to get over the difficulty which I know exists concerning the contribution records of the self-employed under the new system.
The Inland Revenue has collected these contributions. The Minister's Department will be in considerable difficulty in keeping a personal record of every self-employed person's contribution. If a self-employed person's entitlement to benefit is challenged, I expect that it will be a huge administrative job to try to sort out whether that person's contribution record is in order.
Will these special class 4 people be in a better position? Are personal records to be kept of these special contributions? Will the difficulties be overcome so that, in finding themselves treated as self-employed—and thereby treated in a penal way by the Government—these people can at least have the assurance of knowing that the Government are keeping an accurate administrative record of their contributions.

10.50 p.m.

Mr. Alec Jones: It is much easier to ask questions than to answer them. I readily accept, as the hon. Member for Rushcliffe (Mr. Clarke) said, that if the regulations are not as perfect as we wish them to be there might be a few constituency problems. Because of the complicated and technical nature of some of the issues raised by the hon. Gentleman it may not be possible to reply fully tonight, but I assure him that his comments will be examined in depth tomorrow and that he will receive a full and detailed reply.
It is not correct to say that we are constantly changing our mind. The sets of regulations which have been brought before the House are additions and not replacements. It is a question not of amending—although that word is used— but of adding to the existing regulations.
The hon. Gentleman referred to the borderline between class 1 and class 2, but that is not dealt with in these regulations. It will be dealt with in later regulations concerned with the categories of earners.
My hon. Friend the Minister of State said in the earlier debate that after discussion with the Churches the interim decision was to allow the clergy to remain self-employed contributors during the 1975–76 tax year, and that regulations under Section 1(8) of the 1973 Act will be brought forward to provide that clergymen are treated as self-employed earners. Clergymen are the only group which we so far envisage being treated as a special class.
The hon. Gentleman referred to individuals having the right to opt, but that is not so. There is no individual option. Groups can be transferred by regulation, but not individual contributors.
My hon. Friend the Minister of State has promised to consider taxi drivers. All employed taxi drivers will continue to be in class 1, and bailee taxi drivers will be in class 2.
The age of exemption is set at 70 because everyone is deemed for all pension purposes to be retired at that age.
I have picked up one or two of the hon. Gentleman's questions, with assistance, but if there are any questions which I have not answered I shall deal with them by correspondence.

Question put and agreed to.

Resolved,
That the Social Security (Contributions) Amendment (No. 2) Regulations 1974, a draft of which was laid before this House on 30th October, be approved.

SOCIAL SECURITY (MARRIED WOMEN AND WIDOWS)

10.52 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): I beg to move.
That the Social Security (Benefit) (Married Women and Widows Special Provisions) Regulations 1974, a draft of which was laid before this House on 6th November, be approved.
These regulations carry forward similar existing provisions which are beneficial and, as I hope the House will agree, non-controversial.
The regulations are to replace, from 6th April 1975, when Part I of the Social Security Act 1973 comes into operation, similar provisions relating to benefit matters which are at present contained in the


National Insurance (Married Women) Regulations 1973 which were made under the provisions of the National Insurance Act 1965.
The existing regulations also include provisions relating to contributions, but those contribution provisions are dealt with in separate regulations under the 1973 Act. These are the Social Security (Contributions) (Married Women and Widows Special Provision) Regulations 1973 which are currently being amended.
These benefit regulations concern the special provisions which are made to enable married women and women whose marriages have been terminated, either by the death of their husbands or by divorce, to qualify for benefit under the Act. Their main purpose is to enable women whose marriages have ended to requalify for short-term benefits more quickly than they would otherwise be able to do by paying contributions in the normal way, and to assist them more easily to qualify for retirement pension. The need for these provisions arises because many of the women concerned will not have been paying full-rate contributions whilst married and, when receiving widow's benefit, will be able to choose whether or not to pay full-rate contributions.
Under the terms of the 1973 Act, the regulations are being made without reference to the National Insurance Advisory Committee.
Although not coming into force until 6th April 1975, these regulations are required to be made by 6th December 1974 to enable claims for retirement pension in respect of persons who reach pensionable age on or after 6th April 1975, which can be made up to four months in advance, to be determined.
Before I turn to the provisions of the individual regulations it may assist the House if I explain that, in order to qualify for most benefits under the Act, it is necessary to satisfy two contribution conditions. The first requires a certain level of contributions to have actually been paid in any income tax year. The second requires a certain level of contributions to have been paid or credited in a relevant year or years. In the case of short-term benefits, such as sickness benefit and unemployment benefit, the

relevant year is the income tax year preceding the benefit year, and in the case of long-term benefits, such as retirement pensions, widowed mother's allowance and widow's pension, the condition has to be satisfied in some nine-tenths of the income tax years in the contributor's working life.
I turn now to the regulations. Regulation 1 is formal. Regulation 2 assists widows and divorced women who are in employment to qualify more quickly for unemployment and sickness benefit and maternity allowance after the end of their marriage by crediting them with contributions to enable them to satisfy the second contribution condition for those benefits. Without this regulation, it could take up to two years after the end of their marriage for them to re-qualify for these benefits by paying contributions.
Regulation 3 assists widows when their widow's allowance or widowed mother's allowance has ceased. They are assisted to qualify for unemployment and sickness benefit, maternity allowance and retirement pension on their own contributions by having the first contribution condition for those benefits deemed to be satisfied and by being enabled to satisfy the second contribution conditions for the short-term benefits for a limited period. The widows are also given entitlement to unemployment benefit for a full 312 days. The regulation makes similar provision for widows under 60 of certain recipients of old person's pensions and for war and industrial widows.
Regulation 4 and the schedule to the regulations extend to divorced women various rights, already provided for widows under the Social Security Act, in that they are allowed to use their former husbands' contributions as their own to enable them to satisfy the second contribution condition for retirement pension.
Regulation 5 enables the contribution record of a divorced woman's former husband to be used, if necessary, to satisfy the condition for death grant on her death.
Regulation 6 provides for class 3 contributions to be credited to widows for an initial period following the death of their husbands and thereafter, if they are awarded the appropriate widow's benefit. The main purpose of this regulation is to assist them, when they reach


age 60, to satisfy the second contribution condition for retirement pension.
Regulation 7 enables a widow receiving widow's benefit when she reaches age 60 to be deemed to satisfy the first contribution condition for retirement pension.
Regulation 8 applies to married women claiming unemployment benefit and requires that due regard shall be paid to their domestic responsibilities as married women in considering whether they should be disqualified from benefit on the grounds that they left their employment voluntarily without good cause or lost it through misconduct or refused to accept suitable employment or training.
Regulation 9 enables widows to receive widowed mother's allowance, widow's pension or retirement pension, and divorced women to receive retirement pension, at reduced rates where the second contribution condition for those benefits is not fully satisfied. Any increase for a child is, however, to be paid at the standard rate. The regulation sets out how the reduced percentage of standard rate pension is to be calculated and provides that no pension shall be paid if that percentage is less than 25. This broadly follows the existing provisions for reduced rate pensions in these circumstances.
Regulation 10 provides, for the purposes of these regulations, for a woman whose voidable marriage has been annulled to be treated as a divorced woman, and for a woman whose husband has been presumed dead to be treated as divorced unless the date of death has been established to the satisfaction of the Secretary of State or the independent determining authorities, in which case the woman is treated as widowed.
Regulation 11 applies to divorced women whose husbands were insured under the National Insurance Act 1965 and earlier Acts and makes similar provisions as are made for widows in other regulations—(the Widow's Benefit, Retirement Pension and Other Benefits (Transitional) Regulations 1974). It amends the schedule to those regulations so that the former husband's contributions under those Acts can be taken into account.
The schedule sets out alternative methods of making use of a former husband's contributions for the purposes of Regulation 4.
These regulations give entitlement to benefit to people who would not otherwise have entitlement, and I have pleasure in commending them to the House.

11.1 p.m.

Mr. Kenneth Clarke: I am grateful to the Minister for having read his explanation of these involved regulations. My hon. Friend the Member for Woking (Mr. Onslow) has reminded me that it was the practice under the Conservative Government for regulations like this to be moved formally and then for the Opposition to put questions and comments on them, with the Minister replying in some detail. I think that that practice would have suited this occasion.
I wish to put two straightforward points arising out of the regulations, which are welcome and necessary ways of enabling a divorced woman or widow to rely on the husband's contribution record for most purposes. We do not stand in the way of these desirable objectives.
Regulation 6 gives a widow the right to be credited with contributions for a certain period after the death of her husband. One assumes that this is in order to give her time to get over the shock of bereavement. It will credit her with contributions for a reasonable time while she arranges to get employment if she has to keep herself and her national insurance record to retirement.
Will the hon. Gentleman consider making similar provision for a divorced woman to be credited with class 3 contributions for a short period ofter the dissolution of the marriage? In some cases the divorce comes as no sudden shock but in other cases, on dissolution, a middle-aged housewife who has not been employed for many years suddenly finds herself called upon to get back to employment and find a way of keeping herself if the maintenance from her ex-husband is inadequate. Are the Government considering introducing regulations, comparable to the provisions in Regulation 6, which might give some assistance to such women?
We are familiar with these matters from dealing with constituency cases, so my next point concerns whether the hon. Gentleman has considered giving access by a wife to her husband's contribution record so that she knows her position. I am thinking particularly of a wife living apart from her husband when divorce is pending. She may have no real idea of how he has been keeping in work and whether he has maintained the proper national insurance contribution record on which she may be able to rely once the marriage is dissolved.
This also applies to legally separated women, although I recognise that it is difficult to do anything for them, because often a separated woman has no idea whether she would be better off divorced, since she has no idea where her husband is or whether he is keeping in work or is maintaining the national insurance contribution record which will help her eventually.
What views have the Department on giving a separated wife or a woman who is contemplating divorce access to or information about her husband's contribution record, so that she can know at an early stage whether the attempts which are made to assist her in these regulations will be of use once the divorce is finalised and she finds herself making provision for her own retirement?

11.5 p.m.

Mr. Alfred Morris: I am grateful to the hon. Member for Rushcliffe (Mr. Clarke). His points are important. We shall carefully consider everything he has said and we shall be in touch with him to let him have definitive answers to all his points.
I agree that these are involved regulations. I noted the point which the hon. Member said had been put to him by his hon. Friend the Member for Woking (Mr. Onslow), but there is no question of our seeking any procedural change which would disturb the balance of information between the two sides of the House.
These regulations carry forward similar existing provisions which are beneficial. The problems of those affected are of deep concern to us all. I shall contact the hon. Member on what he has said about Regulation 6 and access to a husband's contribution record. I am grateful to him for the kindly way in which he has received the regulations.

Question put and agreed to.

Resolved,
That the Social Security (Benefit) (Married Women and Widows Special Provisions) Regulations 1974, a draft of which was laid before this House on 6th November, be approved.

WELSH GRAND COMMITTEE

Ordered,
That, notwithstanding the provisions of Standing Order No. 64 (Meetings of standing committees), for the consideration of such matters as may be referred to them, the Welsh Grand Committee shall meet in the present Session on the following five days: viz.:— 4th December, 5th February, 7th May, 11th June and 16th July.—[Mr. Walter Harrison.]

Ordered,
That, during the proceedings on the matter of Industry and Employment in Wales, the Welsh Grand Committee have leave to sit twice on 4th December; and that at their afternoon sitting the Committee shall meet not earlier than Four o'clock and proceedings on that day shall not continue after Six o'clock.— [Mr. Walter Harrison.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Ellis.]

M25, CHERTSEY-WISLEY

11.9 p.m.

Mr. Geoffrey Partie: It seems a characteristic of most of our motorways that their conception dates back to pre-war days. The M25 orbital route is no exception, since it traces its lineage to 1936, which, the House may be surprised to learn, is, despite appearances, the year in which I was born. Some parts of the M25 are actually under construction, and others are in the final planning stages with the contracts let.
There is, however, one section into which the unsuspecting future motorist will tumble. This is a section which simply does not exist at all, the Chertsey to Wisley section. I prefer to call it the case of the phantom motorway. The story is a sorry one and in my view is an utter condemnation of British bureaucracy and a mockery of any pretence of an understanding between Government and governed.
The history of this matter is as follows. Public inquiries were held in June and July 1971. There was then an inordinate delay before a decision letter was produced by the Department of the Environment on 11th September 1973. That in itself must have been straining the time limit to the utmost. I want to quote two paragraphs from that decision letter. The first states:
Various alternative routes through the premises of the British Aircraft Corporation at Weybridge had been proposed by objectors to the published route. The Department produced a version crossing the Corporation's runway which in the Inspector's opinion merited close study. The Inspector concluded that had it not been for the effect of this alternative on the activities of the Corporation dependent on the runway and on the employment given he would have found in favour of it. He, therefore, recommended the Secretary of State to obtain a confidential report on the future of the Weybridge Works before reaching a decision on the route.
The second paragraph states:
The Secretary of State recognises that there are a number of difficult issues both environmental and otherwise affecting both the published and the alternative routes on which he wishes to be better informed being reaching a decision. For this reason, he is having further studies carried out. Depending on the outcome of these studies it may be decided to publish revised proposals which would be open to objection in the usual way or, alternatively, to adhere to the present draft Scheme, with possible modifications. In either event, the Secretary of State will not reach a final decision on the route until an opportunity has been given for further public consultation and, if necessary, a reopening of the Inquiry. A further statement will be made when the Secretary of State is able to announce what course he proposes to pursue.
All that was on 11th September 1973.
We then had the General Election of February 1974. I was then in the position of being able to put a Question at the end of March, in which I asked the Secretary of State for the Environment if he would
make a statement concerning the designation of the route of the five-mile section of the M25 from Chertsey to Wisley.
To that the Minister replied:
My right hon. Friend will make a statement as soon as evaluation of the various options is complete."—[OFFICIAL REPORT, 1st April 1974; Vol. 871, c. 281.]
That was a further six months after the decision letter.
My hon. Friend the Member for Woking (Mr. Onslow). who will seek to take part briefly in the debate, had a reply

to a Question of his on 21st June in which he was told that the Department hoped to be able to announce the decision by the late summer. I know it is often said that Governments get rather remote from the public, but I hope that the Minister has been outside the House recently and had a look at the present climatic conditions. By no stretch of the imagination could we be described as being in the late summer. This is, therefore, on 26th November, stretching it a bit. We are now 14 months from the decision letter.
For three and a half years my constituents and those of my hon. Friend the Member for Woking have had their homes blighted. They have been in a state of complete uncertainty and anxiety, unable to plan for their future. This really has become something of a sick joke in the constituencies of my hon. Friend and myself.
There is a further refinement to this almost psychological torture of my constituents. We now do not even know what type of motorway it will be. It was originally conceived to be one of the four-lane jobs. I gather that it was to be the first one in the country. There was a statement in June this year about a possible reduction in the width of motorways, although I tabled a question following that, no further statements materialised as to whether this would be a three-lane motorway, a two-lane motorway or whatever else. Certainly, if the delays continue as they are at present, it will have dwindled away to a bridle path before long—which many people might welcome.
What happened at the original inquiry in 1971 was that the alternative route was obviously considered to be extremely good but, because it went through the British Aircraft Corporation airfield at Brooklands, the BAC, understandably, opposed the plan.
I have recently taken the precaution of corresponding with the British Aircraft Corporation to find out what its latest position is. I quote from a letter written to me by the Deputy Chairman of BAC, Mr. Allen Greenwood. The letter, which is dated 4th November, says:
It certainly would be helpful to have this route finalised once and for all, and BAC would prefer that the original line was confirmed


which, of course, would be the least disruptive to our activity at Weybridge and, according to the information we have, the least expensive and least bothersome to existing residents, etc., than any alternative line. As you must know, taking the M25 over the airfield also raises such questions as flood avoidance schemes by the Thames Conservancy Board.
Were there to be another Public Inquiry we would almost certainly be an objector, although it is true that our present interest in the runway is very different from that which we had at the time of the last Inquiry and, indeed, arrangements have now been made whereby the responsibility for the whole of BAC's premises to the West of the River Wey has been transferred to BAC's shareholders. Depending on events"—
that is a very good phrase—
they might conceivably have a different view as far as their interest is concerned, although I would not expect this to be the case.
I suspect that a deal has been made somewhere behind the scenes to delay the delineation of the route until the future of the British Aircraft Corporation at Weybridge can be clearly known.
It is ironic that both my hon. Friend the Member for Woking and I are keenly interested and involved in aviation and aerospace, he being a former Minister in that line of country, and we know quite a bit at first hand about the problem, not only of the industry but also of the British Aircraft Corporation at Weybridge. This serves only to heighten our suspicion that something has been going on. I am only voicing the suspicions that are uttered many times in constituencies when people say, "I think that the British Aircraft Corporation is in league with the Department of the Environment and that either the land will be used for housing or the BAC will get massive compensation".
The time has come for all these games to stop and for the Civil Service machine to stop playing games of its own with the lives of my constituents and those of my hon. Friend. I should like an announcement to be made by the Minister tonight either confirming the original route or setting up a further inquiry. Will he please, after three and a half years, remove this uncertainty and tell my constituents exactly what they can look forward to and remove all their anxiety and apprehension?

11.13 p.m.

Mr. Cranley Onslow: I want briefly to endorse the comments which

have been made by my hon. Friend the Member for Chertsey and Walton (Mr. Pattie). I will not reiterate the case he made so strongly and admirably. I share his views that matters have reached the point where the delay has gone beyond a joke and has become unacceptable. The excuses we are given now have the character of waffle about them. The late summer has long since passed. So has the time for a decision.
I know full well that the decision in this case is a difficult one. The route, whichever way it goes, is bound to affect quite pleasant pieces of countryside as well as residential areas. If it goes along the route of the Wey, it will have the most unfortunate effect of running across one of the best cricket grounds in the county where my hon. Friend and I have more than once watched enthralling games of cricket. It will also run through some very pleasant meadows where, the Minister will find it difficult to believe, one of my constituents rears Highland cattle.
If the route goes the other way, it will have very harmful consequences for people who bought their properties in the expectation that the route would not come anywhere near them.
Ministers have to take difficult decisions, and they are paid to do so. I know that this decision has been waiting to be taken by a Minister for a year. The time has come when it must be taken one way or the other. It is a fact that the indecision is causing hardship to many of my constituents and to those of my hon. Friend, in particular to those who are unable to find buyers for houses they want to sell, especially when they are not covered by the statutory blight provisions.
This seems to me to be an inexcusable situation. I have told constituents who have complained to me that I believe they already have a strong case for laying before the Parliamentary Commissioner a complaint of maladministration against the Minister. Unless we get satisfaction tonight, I shall encourage my constituents to lay such a complaint.

The Under-Secretary of State for the Environment (Mr. Neil Carmichael): I am grateful to the hon. Member for Chertsey and Walton (Mr. Pattie) for providing this opportunity for me to


explain the problems which have been facing us in the Department, under several Governments, in relation to this controversial section of the M25, and to the hon. Member for Woking (Mr. Onslow) for expressing the difficulties which burden his constituents as a result of the present uncertainty about this section of the route. I am also grateful to the hon. Member for his mention of the British Aircraft Corporation's letter of 4th November, which I will have looked up and of which I will certainly take note.
In a lighter vein, perhaps I may say that I am conscious that summer has passed. I go home every weekend to Scotland, and I appreciate perhaps a little quicker than people in the South that summer has passed. As a Scotsman, I might be forgiven for saying that had one of the alternative routes passed through a golf course instead of a cricket ground I might take a slightly different attitude.
This is a particularly difficult route and I hope that hon. Members will bear with me while I give as much informations as I have available to me and undertake to write to them about any of the more specific points on which I am not sufficiently well informed. I hope that I am able to answer some of the points which have been raised, particularly the point of indignation which I thoroughly understand.
One of the problems in matters like this is that giving people the opportunity to make representations sometimes delays matters inordinately, and I am conscious that this matter goes back some time. Another problem is that the more difficult the route and the more difficult the area which it is proposed to cross, the longer it takes to reach a decision.
The South Orbital Motorway is important not only for its orbital function but as a link between the radial motorways M20, M23, M3 and M4, and for these reasons it is being accorded the highest priority. Hon. Members are understandably anxious to see progress made with fixing of the route of the Chertsey-Wisley section. Decisions have already been taken on the route for the remainder of the M25 between Egham in the west and Wrotham in the east and two sections, between Egham and Thorpe

and between Reigate and Godstone, are already under construction.
Hon. Members who are much more familiar with this part of the country than I am, although I have been round the area a few times, will know better than I do the position on the ground.
The section with which hon. Members are now concerned, between Chertsey and Wisley, has presented difficulties which, as I shall explain, have made it necessary before any further decision can be made to carry out an intensive study not only of the route proposed by the Department but also of other alternatives which have been put forward.
I am very well aware that many people, particularly in the New Haw and Byfleet areas, will be vitally affected by whichever route is ultimately chosen, and they are, of course, impatient to learn the results of the investigations which they have been told are under way. It is of the first importance, however, that before any decision is taken the fullest possible information on all the complex factors which can affect the choice of the route should be available to my right hon. Friend the Secretary of State.
The recent history of the route begins with the publication of draft schemes in 1970 showing the route proposed by the Department for the Chertsey-Wisley section and of the adjacent section between Wisley and Leatherhead. These schemes were considered at a public inquiry which took place between June and September 1971. I think the hon. Member for Chertsey and Walton said that there were two inquiries, but I think it was probably one extended or adjourned inquiry.
I need say no more at this time about the Wisley to Leatherhead section than that it was at the time highly controversial and many difficult issues were considered by the inspector in his long and comprehensive report. The consultations on two minor modifications on this section have now been completed and I hope shortly to be able to make a further statement.
On the Chertsey-Wisley section, however, the main issue at the inquiry arose from various proposals put forward during the inquiry for an alternative route which


would have crossed the runway of the British Aircraft Corporation's airfield at Weybridge. In view of the hon. Member's remarks I shall certainly be asking searching questions tomorrow to find out about this rumour or belief to see whether there is something behind the suggestion that the Department and the BAC had some sort of arrangement with each other. I would doubt that very much, but I am interested sufficiently to ask specifically about it.
The advantages claimed for such a route were that it would avoid the damage which would be caused by the published route to residential properties in New Haw, Byfleet and West Byfleet. The inspector considered the issues very carefully and decided that
The Department's version of a route crossing the BAC runway merits close study. On the debit side, it does serious damage to the market garden activities of Moated Farm; directly affects the development of 12 houses taking place on New Haw Road and other property on that road; has a detrimental effect on the Weymede Estate, whose amenities are already to be affected by flood prevention work planned by the Thames Conservancy; would demolish the White Hart at New Haw and would affect the amenities of the Wey Navigation at the crossing near New Haw Lock. The damage to these interests is admittedly less in total than the damage to the interests affected on the published line; but I think it is a relevant point that the latter had reason from the development plan to expect the trunk road to be constructed through or near to their properties … but the former had no such expectation. None the less were it not for the effect of the alternative route on the activities at the Weybridge Works that are dependent on the runway my conclusion would have been in favour of that route …".
Having regard to the evidence given by the British Aircraft Corporation about its future plans or intentions in relation to activities dependent on the runway, and to the employment given by such activities, the inspector felt he had to find against the alternative route but called special attention to the arguments placed before him by the objectors and recommended that before a final decision was reached a confidential report on the future of the Weybridge works should be obtained. This might be part of the basis of the rumour, but I intend to ask about it.
After the most careful study of the inspector's report, the then Secretary of State announced on 11th September 1973

that, in recognition of the difficult issues, both environmental and otherwise, affecting both the published and alternative routes, he wished to be better informed before reaching a decision. For this reason he proposed to have further studies carried out. Depending on the outcome of these studies it might be decided to publish revised proposals which would be open to objection in the usual way or, alternatively, to adhere to the published scheme with possible modifications. In either event no final decision on the route would be reached until an opportunity had been given for further public consultation and, if necessary, a reopening of the inquiry. The then Secretary of State promised a further statement when he was able to announce what course it was proposed to pursue.
Since that time the most intensive investigation of the alternatives has been in progress. These studies have brought to light important revisions of some of the information, both environmental and technical, which was before the inspector when he made his recommendation. Having regard to this fresh information which is now available both in relation to the BAC route and the published route with a possible variation, and in fulfilment of the undertaking given by his predecessor that a final decision would not be reached until an opportunity had been given for further public consultation, my right hon. Friend has decided to reopen the inquiry in respect of the section of M25 between Chertsey and Wisley.
In preparation for the inquiry, plans and information about the alternatives will be put on display and an exhibition will be held which will give all concerned the opportunity to consider the fresh information now available and to make any further representations they may wish. After an appropriate period for the receipt of representations the inquiry will be reopened in the spring of next year, providing the opportunity for full explanation and discussion of the issues involved.
It is my right hon. Friend's wish that this will lead to clarification of all the factors bearing on the selection of the route and will pave the way for an early decision and the removal of the uncertainty which, as the hon. Members have made clear and which I agree exists, is at present causing much distress, blight


and anxiety in the areas affected by the various possibilities at present in being.

Mr. Onslow: I am grateful to the hon. Gentleman for giving way and also for announcing a decision. The effect of what he is saying must be to prolong some uncertainty for a period that will run on until next summer. What is the situation with regard to the householders on the alternative routes? Will they be covered by the statutory blight provisions?

Mr. Carmichael: I am conscious of the difficulties, and the hon. Gentleman will realise from the announcement made today by my right hon. Friend about the Channel Tunnel that we are very concerned about planning blight. It is appalling that because the community decides to build a road people are put into difficulty. I lean over backwards to help as far as the statute will allow. I hope to say something about this, and perhaps the hon. Gentleman can discuss the matter with me later or write to me about specific cases.
The hon. Member for Chertsey and Walton has raised the question of the number of lanes to be provided on this section of the motorway. This question has been reviewed in the light of the general review of standards announced by my right hon. Friend on 17th June and it has been decided that the Chertsey-Wisley length will be constructed to dual three-lane standard. There is a good deal of information, and studies too, to show that the dual three-lane standard will be adequate for this road.
With regard to the question of planning blight raised by the hon. Member for Woking, the Department is prepared to purchase properties which come within the planning blight provisions. In cases where a valid claim for purchase of a property under these regulations is established, compensation is assessed by the district valuer on the basis of current

market value—that is to say, the value which the property would be expected to realise if offered for sale on the open market and no new road proposals existed. Whatever route is finally fixed, full use will of course be made of the powers now available under the Land Compensation Act 1973 to mitigate the adverse effects of the motorway on its surroundings.
I agree that I have not covered all the points that have been raised, and the interpretation of blight is something that we can go into in individual cases. I am grateful to the hon. Member for explaining the problems that result from the present uncertainty and for giving me this opportunity to announce the reopening of the inquiry. The Department will shortly write to all those who have previously made representations or objections about these proposals and will as soon as possible give full publicity both to the arrangements for the making of representations and for the reopening of the inquiry.
I think both hon. Members realise that this is a particularly difficult problem. It has affected two different Governments, and we are aware of it. We are aware, too, of the sensitivity of the area. The road not only covers one section of the country but links up no fewer than four motorways. It is, therefore, an important national road as well as being something that affects individuals. We are doing everything possible to help. We are building a controversial road. We are trying to make as much allowance as possible for all the problems that arise, and we shall do the job expeditiously. It is an unenviable task, but I can assure hon. Members that we shall not waste time. I shall do everything possible to cut down what the hon. Member described as Civil Service bureaucracy.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes to Twelve o'clock.